• Fixed term annuity market to grow by 26% in two years
More than three quarters (77%) of specialist retirement income advisers expect the fixed term annuity market to grow in the next two years, according to new research1 from innovative retirement income specialist, Primetime Retirement. Indeed those IFAs anticipating growth think that on average, the market will grow by 26%.
The research also revealed that more than three in four (76%) specialist retirement income advisers have seen a rise in the number of retired people coming to them for advice in the past year. With high inflation, record low interest rates and annuity rates combined with the fact that people are living longer, Primetime Retirement thinks this trend is set to continue – indeed the research showed that four in five (79%) IFAs expect to see an increase in the number of clients asking for advice about annuity purchase in the next 12 months.
The average Lifetime Annuity (LTA) rate offered by the top 5 providers for a male aged 65 investing £100,000 (with a 5 year guarantee) is currently £5,474 p.a. whereas the maximum GAD income for the same client and investment is £5,500 p.a.. Primetime Retirement can currently offer the same client an income of £7,704 p.a. (subject to GAD). Matching the income from the average of the top 5 LTA providers with a Primetime Retirement Plan over 5 years would give the client a maturity lump sum of £82,212.1
Primetime Retirement CEO Kim Lerche-Thomsen said: “Flexibility is prevalent throughout other areas in financial services, so why not for retirement income products? Despite people living much longer, a person’s health and family circumstances are unpredictable. Fixed term annuities allow those in retirement to determine which type of annuity suits them best in stages throughout the latter part of their life. Those who are in good health and still working want to keep their options open in retirement and need retirement income solutions which are flexible enough to adapt.”
Primetime Retirement, which pioneered the fixed-term annuity in the UK as Living Time, believes the research highlights the income gap facing many people in retirement - and the need for increased flexibility and innovation in retirement income solutions. Primetime Retirement has seen strong demand from IFAs and clients as low annuity rates drive interest in alternatives to conventional annuities including fixed-term annuities.
Kim Lerche-Thomsen continues: “With an anticipated rise in retirement income and purchase advice, advisers have a genuine opportunity to add real value to their retirement business at a time when clients approaching or at the point of retirement are changing their views on what retirement means.”
Primetime’s research showed that the main concern for clients when asking for advice about retirement income was not having enough income cited by four in five (81%) IFAs. Nearly two thirds (64%) highlighted death benefits and ensuring their client’s spouse/partner is financially secure as the main concern. And more than two in five (44%) IFAs suggested their clients are primarily concerned about retaining flexibility over retirement income.
The Primetime Retirement Plan is a deposit-based investment which offers advisers and clients a combination of a fixed income for either five or six years which is not affected by age or gender; and a Protected Maturity Amount at the end of the term which they can use to purchase another appropriate pension product. It also offers Value Protection Plus death benefit, a valuable lump sum benefit for those looking to pass on as much of their fund as possible should they die prematurely.
For those clients looking to boost the potential purchasing power of their maturity fund, Primetime Retirement also offers a variety of investment upside alternatives to their core plan, using a Structured Deposit that links an additional maturity lump sum to the performance of the FTSE 100 Share Index. Clients can choose among the Accumulation+ plan aimed at those who are still saving for retirement; the Capital+ Plan for those seeking income and potentially higher growth; and Income+ for those looking for higher income.
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