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72% of advisers believe clients should have some guaranteed income and 82% of savers want to have most of their income guaranteed
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Pension freedoms six months shows strong demand but lack of new solutions, MetLife warns
Industry data underlines the popularity of pension flexibility with the Financial Conduct Authority* showing more than 204,000 over-55s accessing their cash in the first three months which is more than double the 95,000 in the comparable months of 2013.
But MetLife believes the industry has yet to rise to the challenge and that the industry has focused on updating existing solutions rather than delivering innovation which meets the need for certainty, flexibility and value for money.
MetLife analysis** shows the success of traditional drawdown in the new era has come at a price with savers nursing losses of up to £250 million due to stock market volatility since April 6th.
Adviser and consumer research for MetLife shows strong demand for some form of guarantees – 72%*** of advisers believe clients need some level of guaranteed income while 82%**** of savers want most of their income guaranteed.
Simon Massey, Wealth Management Director at MetLife UK said: “The six-month mark is a natural time to review pension freedoms and the verdict for the industry is that we must do better.
“Savers have embraced flexibility and are engaging with the new freedoms but as yet the industry is not meeting demand with new solutions for 21st century retirement.
“We believe MetLife’s new Retirement Portfolio is the first product specifically designed for pension freedoms and provides daily lock-ins of investment gains while enabling savers to start, stop and restart their income* to suit their personal needs.
Customers can choose from a range of investments to build a personalised retirement plan suited to the levels of risk they are willing to take while having the choice of a valuable guaranteed level of income for life or guaranteed capital sum.
The Secure Income Option offers the choice of guaranteed income now, and an enhanced income deferral rate of 5% for those seeking the certainty of a higher future income. MetLife calculates guaranteed income for life based on the value of a customer’s initial investment and their age when selecting the option. Our guarantees also include valuable guaranteed death benefits.
MetLife’s Retirement Portfolio provides a unique investment growth lock-in so that any increase in the value of a client’s investment above their existing guarantee base is locked-in daily. MetLife has developed its innovative Active Asset Allocation which invests in a combination of the MetLife BlackRock Global Growth Fund and a range of MetLife Fidelity Corporate Bond Funds.
Guarantee charges start from 0.6% on the Secure Income Option and 0.3% on the Secure Capital Option. Investments through MetLife’s Active Asset Allocation invest in funds that have a total expense ratio of 0.55% per annum. Minimum investments into the Retirement Portfolio are £30,000.
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