“Being in the financial services industry we aren’t strangers to numbers and statistics. And some of the numbers since the pension reforms were introduced have been quite staggering. Retirees in the UK control 33 per cent of the liquid wealth in the country – that’s the equivalent of £1.3 trillion. So with all the flexibility and freedom to spend, save or invest their money how they want, what has the last 80 days meant for the industry?
“Personally, I’m not surprised that only one per cent of customers have opted to strip out their pension fund in one go1 and that’s mostly people with smaller pensions . So fears that people would squander their pensions don’t seem to have come to fruition. Of those over 55s who are taking money from their pension:
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13 per cent are looking to invest in non-property products
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nine per cent plan to invest in their own homes
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eight per cent plan to improve their standard of living2.
“These all seem like quite sensible things to me.
“Most people are keeping their money invested, looking to make the most of the new flexibilities and developments in the market to ensure their money lasts as long they do. Advisers now have access to many more online tools to help them show clients how much money they will need in retirement and how long their money will last.
“With 80 per cent3 of investors still wanting some form of income guarantee in retirement to make sure the essentials like food and housing are covered, we’ve seen more hybrid blended solutions that offer aspects of both annuities and drawdown coming to the market. Of course, some of these did exist already and are tried and tested products.
Investing for income in retirement has probably seen the most innovation. A number of new funds have been launched; some aim to maximise pension pots in the run up to retirement, while others are designed to help retirees in the decumulation phase. Either way, most have aimed to preserve capital and provide income in retirement.
“So it’s definitely been a busy couple of months for all in our industry and there are few signs of it getting any quieter any time soon.”
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