Just one in ten financial advisers say they would use their own retirement fund to buy a conventional or enhanced lifetime annuity in the current market, new research by MetLife shows.
Uncertainty surrounding future gilt yields and annuity rates, which remain at near historic lows, has convinced the majority of advisers to steer clear of putting their retirement fund into lifetime annuities with just 10% saying they would invest entirely in a conventional or enhanced annuity. Around 16% say they would delay making a decision in current conditions with 21% saying they would use a mix of drawdown, unit-linked guarantees and fixed-term
annuities. Drawdown remains the most popular retirement income solution for financial advisers.
Advisers are also reporting rising interest in alternatives to annuities – MetLife’s nationwide survey found 42% of advisers’ clients are inquiring about other retirement income solutions. One in 10 advisers’ says more than 80% of their clients are asking about alternatives.
Dominic Grinstead, Managing Director, MetLife UK said: “Conventional and enhanced annuities will remain the most popular retirement income solution for the majority of pension savers for the foreseeable future.
“However it is striking that just one in 10 advisers themselves would rely on a conventional or enhanced annuity for their own retirement income in current market conditions.
“There is strong demand and growing interest in alternatives to conventional annuities and innovation is crucial in driving expansion in the retirement income solutions market.”
The research among advisers shows 52% say the recent rise in the stock market has increased the benefits of capital guarantees which lock in investment gains. MetLife has seen rapid growth underpinned by its Managed Wealth Portfolios which have grown to £1.011 billion under management in just 12 months after launching the new funds in partnership with world-leading asset manager BlackRock.
The successful launch has helped drive MetLife’s total funds under management in the UK to more than £3.9billion since launch in January 2007.
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