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The latest IFA
Insights survey from AEGON shows that there is a need for flexibility
in today’s retirement solutions.
Eighty six per cent of independent financial advisers (IFA) said
that their clients want more flexible retirement products, and 84
per cent expect their clients’ retirement needs to change
throughout retirement.
More than eight out of ten IFAs (84 per cent) said that increasing
numbers of their clients intend to continue to work in some capacity
after they reach retirement age, and a similar number are concerned
that they may need to access additional ‘contingency’
income in retirement.
Under current legislation the only retirement solution that offers
income flexibility is unsecured pensions, where income taken from
the fund can be flexed up or down, within limits, depending on income
needs. However, poor investment returns can cause income levels
to fall significantly, as they are not guaranteed. Sixty three per
cent of IFAs said an absolutely guaranteed minimum income was important
to their clients.
As a result, AEGON is calling on the Government to look at pensions
legislation to allow the smooth emergence of new retirement solutions
that better meet peoples income needs and life events.
“IFAs recognise that retirement is no longer the lifestyle
cliff edge it once was,” commented Rachel Vahey, head of pensions
development at AEGON. “The decisions people now approaching
retirement will have to take about their aspirations and income
needs for that stage in their lives are very different to those
of previous generations.
“IFAs clearly have an appetite for more flexibility in product
propositions. But tax rules aren’t flexible and often create
unnecessary barriers, preventing people planning for their income
and savings needs in retirement in a holistic way. We must stop
looking at the rules in isolation and find out what solutions the
consumer wants to help them provide for a self-sufficient retirement
period.”
Vahey concluded: “If we’re serious about encouraging
people to save more we need to give them the flexibility to match
their income to their needs.”
- Pensions Age
November 2008
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