Pensions - Articles - Aegon reveal more details on retirement proposition

 Aegon reveals more detail on retirement proposition ahead of April 2015

  

  

 The introduction of new pensions flexibilities in April 2015 is fast approaching and today Aegon is announcing further detail of its proposition for retiring customers and their advisers looking to take advantage of the changes. Many of Aegon’s proposition elements are ready now.
  

 Combining drawdown and guarantees on platform
 Aegon’s platform will enable customers and their advisers to combine income drawdown and unit linked guarantees on a platform from April a service no other provider offers. Much has been written about the potential for growth of unit linked guarantees and drawdown as separate services. But Aegon believes that combining the two to manage income will be attractive for customers looking for a better blend of security and flexibility. This new option will be called Secure Retirement Income and will be available on Aegon’s Retirement Choices platform (including Workplace) and One Retirement products. Access will be online and will offer the ability for customers to move savings between drawdown and the guarantee as required.
 Research shows that 70%1 of people want income certainty in retirement and Aegon currently offers unit linked guarantees that provide a set income whilst keeping a retiree’s money invested with potential to move in line with markets. Unlike annuities, guarantees are not a one way decision and customers can always remove their money. By combining a modern guaranteed option (Secure Retirement Income) with drawdown, customers will have the ability to vary the amount of income they take over their retirement to fit their lifestage and the proposition will meet the dual customer demands for flexibility and income certainty.
  

 Modern platform technology
 Platforms continue to attract significant assets and it’s clear customers and their advisers want to harness technology to manage their money. Aegon’s platform, which launched in 2012, is built on the most modern technology and as a result has the ability to manage a significant increase in customer demand for services such as drawdown. The platform is the fastest growing2 in the market and uses straight through processing. This means that from April customers can select products and invest at the click of a button without the need for paper applications or signatures. It also means that platform will be able to manage a significant spike in customer demand next April. As Aegon’s platform is multi-channel, these enhancements are available in our workplace and individual drawdown propositions.
  

 Income planning tools and information for advisers
 People will have more options for how they take their pension income but this increased choice also adds complexity and to help customers and advisers devise a plan of action, Aegon is launching a retirement income planning tool. The tool will help the customer and adviser to create and model income plans including taking account of the pensions flexibilities, tax implications and most importantly how long their money might last.

  

 Aegon has also launched a Ready Now site [www.aegon.co.uk/readynow], designed to help advisers understand all elements of Aegon’s income proposition and provide insight on how Budget changes may affect their clients.

  

 Solutions for at retirement investors
 Aegon is designing a range of investment funds specifically tailored to investors at or close to retirement which can sit within drawdown. In September the Aegon High Income Fund was launched and is aimed at people looking to take an income but with potential for capital growth and additional funds with more active income strategies will be launched shortly.

  

 Upgrading customers to modern products
 Many pensions products date back a number of decades and were not designed to enable the kind of flexibility the government now intends people to have. Rather than bolt on features to older products, Aegon is putting systems in place to make it straightforward for customers to upgrade to more modern products which will enable them to manage their savings online and take advantage of the new flexibilities.

  

 David Macmillan, Managing Director, Aegon said;
 “As a business Aegon is focused on helping people accumulate savings up to retirement and then manage their income effectively in retirement. In the past the insurance industry typically only focused on the accumulation phase but the Budget has changed everything and now a differentiated income proposition is vital. Aegon was an early mover in the market for drawdown solutions and variable annuities, and our platform was designed from the beginning to meet the decumulation requirements of advisers and clients alike. While the detail of the Budget came as a surprise, we were delighted by the opportunity to come to market with a fresh and innovative approach to secure income generation.

  

 “The ability to combine true lifetime income guarantees with drawdown on platform will provide customers and their advisers with the certainty of income they tell us they want but also with a huge amount of flexibility both in terms of income and in terms of their ability to switch between products.”