View more on these topics

Early warning

The Retirement Partnership

Steve Lewis; Managing director, The Retirement Partner
Steve Lewis; Managing director, The Retirement Partner

This month, I write having just completed the round Britain tour of the Money Marketing retirement invitational events. In my presentation, I have tried to bring a more lighthearted message to the retirement adviser community about the need for change.

Most significantly for me was the message presented by Aviva, one of the country’s top insurers and biggest annuity writers, telling the assembled throng that the market model for annuity purchase is broken. Key evidence for this shows how many savers with what many will deem to be small funds of, say, £30,000 continue to self-select their retirement option from the data sent by the insurer.

Furthermore the selection is often for a single life, nonescalating annuity, with no spouses pension.

There is clearly something wrong with landing a retirement pack on the retiree’s doormat some eight weeks before retirement age with a limited choice of options and very little education and guidance to go alongside.

The solution though is less palatable for many advisers as inevitably we will now see greater movement to webbased tools and referral models which direct large volumes of people to purely processbased decision-making.

There is clearly something wrong with landing a retirement pack on a doormat some eight weeks before retirement

The call to action I have made to all advisers is to engage with the whole client bank at a much earlier time. We should start with the basics.

Advisers should now be writing to all female clients and indeed the partners of any male clients telling them about their new state pension age.

We should do some simple forecasting of retirement income to ensure that in a household both individuals, most commonly husband and wife, are able to use their enhanced income allowance at 65, currently £9,490, enabling £18,980 per annum to be earned tax-free.

There are also so many new options in the market that really do deserve to be considered as strong alternatives to lifetime annuity. We know lifetime annuity returns are being suppressed by inc-reasing longevity and most worryingly the potential solvency II requirements. We know rates are being skewed by providers on what I regard as an unfair postcode basis. It is now more than ever that people need advice and the professional adviser can demonstrate their true value.

The market model is not providing the pension saver with value. There are though solutions in the market that can and do. I encourage all advisers to take a stronger look at the new market and recognise its value.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm