Retirement is no longer a one-off decision according to IRESS’ latest retirement report: ‘Staying Afloat in Retirement - Income and Annuity Perspectives’. That retirement is now typified by different stages which bring differing demands for income, is supported by the fact that fixed-term annuities now account for nearly a quarter (23%) of all quotes generated, compared to 15% at the end of 2015. The increasing presence of equity release, with volumes up 34% compared to a year ago, and the fact that more than 50% of annuity quotes include medical and health information, also speaks of the demand for more flexible retirement income options.
Chris Pitt, IRESS Head of Market Analysis commented: “Retirement today is a journey and not a destination. Sustainable retirement income remains a core priority, but the reasons for needing it are changing and ‘sustainable’ does not necessarily mean life-long. Retirement planning is adapting to the new multiple stages of retirement, where specific income requirements change over time, and we hope that the FCA’s Retirement Outcomes Review will further stimulate demand for advice to help consumers navigate these complex decisions.
“The increase in popularity of fixed-term annuities, enhanced annuities and equity release, suggest that retirees are becoming more discerning, exploring and testing the various flexible options open to them. With the FCA taking a close interest in this space, the challenge for the industry is to innovate with competitive products that can adapt and interact to achieve the results needed for a more flexible period of later-life living.”
Michelle Cracknell: CEO, The Pensions Advisory Service, who contributed to the report, added: “While the introduction of the pension freedoms was reported as spelling the end of the annuity market, the customers we speak to tell us differently. We have seen enquiries about annuities increase threefold this year compared to 2013-14.
“But, it is not just about volumes of annuities enquires or sales; the report rightly identifies that retirement is no longer “one-and-done” or financed solely by a pension or a few pensions. It is a much more fluid situation where people choose or are forced to change their work plans and have multiple sources of income and capital to draw on as they reduce or stop work.”
The full IRESS Retirement Report can be found here
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