Although the overwhelming view (75% of respondents) was that annuities remain fit for purpose at retirement, respondents were split 50/50 as to whether annuities will remain as the product of choice for retirees.
80% agreed, a quarter strongly, that drawdown products should be a compulsory part of the open market option (OMO) debate with 80% believing that drawdown should be given an equal profile to annuities as alternative retirement products.
However, many respondents raised concerns that an increased use of drawdown could see pensioners exhausting their retirement funds.
Post-Budget the overwhelming view, 97%, was that we will see an increase in the cashing in of small pots for individuals to use for a multitude of purposes. Furthermore, 87% thought that as a result of the budget, more pension savings will be withdrawn as lump sums and used for purposes other than retirement income. Talk of reckless spending such as buying the Lamborghini was dismissed by half of the respondents, but 35% were of the view that some people would spend their money recklessly.
The survey reflected that over 50% of the experts believe that the housing market could be impacted with only 8% who ‘didn’t think so’, and the rest being undecided. However, only 18% of our experts expected a buy to let boom with 36% expecting no change.
A contributing factor, albeit welcomed by 90% of the experts, was the fact that post-Budget pension savings and retirement income vehicles remain tax efficient. Pensioners would be able to access any or all of their retirement funds at their marginal rate of tax as opposed to the current 55% charge for full withdrawals. Allowing further development of new products.
Suzie Rudzitis, Managing Director, Pension Services Division, Equiniti:
“Our 2014 survey saw 40 of the most influential people in the annuity market share their views of the changes required following the Chancellors spring Budget. It is clear that a radical rethink is already happening.”
