Latest news in the Retirement Market

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Here’s a quick look at some of the key changes happening in the Retirement market:

Guaranteed solutions
Over the last decade or so, guaranteed solutions have played an important role for a number of our clients, as they’ve provided security in challenging investment markets. But in an environment of sustained low interest rates, securing the underlying guarantees that provide this certainty is proving more and more expensive to the product providers. Axa Life Invest pulled out of this market last year and now we’ve had confirmation that the market-leader, MetLife, is also pulling out of the UK for new business.

Whilst this is disappointing news, please be assured that MetLife will continue to provide the service you can expect for existing clients and if you have a MetLife guaranteed drawdown solution, the guarantees you have secured under your policy will still apply. This decision only affects new business.

The At Retirement market has been and continues to be an evolving and dynamic world, with providers coming and going and new products continually being developed to meet the future needs of people retiring. Aspira is at the forefront of this advice curve and will continue to keep abreast of changes in this market and offer solutions most appropriate to our clients’ retirement needs.

Taking drawdown pensions without advice

Figures by the Financial Conduct Authority (FCA) show that the number of people entering drawdown without financial advice is six times higher than it was before pension freedoms were launched in April 2015  (up from 5% to 30%). As you probably know, pension freedoms allow everyone over 55 flexible access to their pension pots, which can, without advice result in a couple of serious problems. Firstly, without careful planning people may withdraw too much, too quickly and risk running out of money entirely and having to fall back on State benefits.

Furthermore, there are several ways of withdrawing funds from your pension pot, each with differing tax implications, and decisions cannot be reversed once made. For example, the Money Purchase Annual Allowance (MPAA) is reduced to £4,000 with effect from April 2017, so those who've flexibly accessed their pension pot are severely limited on the amount they can continue to contribute each year. Those not in the know may inadvertently find themselves with a hefty tax bill from HMRC. The FCA was also concerned that those entering drawdown without advice risk being ripped-off by scammers or losing out on potential investment growth.

And finally…

We can’t stress enough the importance of being well-informed when making retirement choices and at the very least savers should use PensionWise for guidance before committing to any particular course of action. Indeed, seeking professional advice could be a sensible choice for many. Should you have any questions or concerns about MetLife’s announcement or about your own retirement income arrangements, then please get in touch.

The value of investments can fall as well as rise, you may not get back what you invest.

MetLife Press Release, 6 July 2017
FCA: More people taking out drawdown pensions without advice, Brian Milligan, BBC News website, 12 July 2017

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