RETIREMENT SAVERS ‘FORCED TO TAKE RISKS’ AS GUARANTEED INCOME CHOICES SHRINK

  • Nearly half (45%) of retirement savers fear they have to take more risk because of a lack of choice for guaranteed income solutions for life
  • More than two-thirds (67%) of advisers are concerned about the lack of choice for clients who want lifetime guaranteed income
  • MetLife report Guaranteeing Real Pension Freedom urges industry to clarify the specific options available at retirement to help prevent savers taking unnecessary risks

 

A new report from MetLife is calling for guarantees and guaranteed drawdown to form a central part of the Government’s new guidance framework to help prevent the unnecessary risks people are taking with their savings at retirement because they don’t understand the choices they face.

The report, Guaranteeing Real Pension Freedom, available to download at www.metlife.co.uk, highlights brand new independent research* which shows nearly half (45%) of over-40s worry that a lack of guaranteed income choices is driving people to take risks with their money – yet one in five retirement savers (20%) don’t fully understand the choices they face which would help them receive the level of retirement income guarantee they are looking for.

Furthermore, two-thirds (67%) of advisers are concerned about the lack of choice for clients who want lifetime guaranteed income.

The report suggests the Government’s plan to launch a new financial guidance service in place of Pensions Wise and the Pensions Advisory Service provides the ideal opportunity to refocus on explaining all retirement income choices, together with their risks.

The challenge for savers is real - nearly six out of 10 (57%) over-40s worry that low long-term interest rates are making retirement saving more difficult and 52% are concerned about not having income certainty in retirement.

Furthermore, around two out of five fear the annuity rates will continue to fall and damage their retirement income.

Simon Massey, Wealth Management Director at MetLife UK said: “Our research has uncovered a worrying gap in knowledge which has the potential to massively impact the retirement savings of a huge number of people.”

“Despite almost half of savers taking more risk because of a lack of guaranteed income solutions for life, one in five admit they don’t understand the choices they face to generate this retirement income. However, if they were confident, they might see there are ways of obtaining the guarantees they want.”

“We believe retirement conversations need to change to include a wider range of options – anything that encourages this, including guarantees and guaranteed drawdown to form part of the new guidance framework, should be supported across the board.”

New research in the report reveals that around 75% of retirement savers say having a guaranteed level of income in retirement and flexibility is important. Around 26% want all their retirement income guaranteed for life. They are supported by advisers who believe clients should have at least 37% of their income guaranteed. And advisers themselves want at least 32% of their own retirement income guaranteed for life

The report covers four specific sections. The first section sets the scene by analysing the storm that is gathering around pension freedoms. The second section moves on to examine the current status of drawdown options. The third section highlights the growing need to expand the retirement conversation to include guaranteed options and the final section moves into setting out the case for need for real change to ensure the future success of pension freedoms.

MetLife’s range of retirement and investment solutions have been designed to meet the need for a guaranteed level of income for life in retirement or a guaranteed capital amount at the end of a chosen term, while providing customers with the flexibility to access their investment if needed.

Customers can choose from a range of investments to build a personalised plan suited to the levels of risk they are willing to take, while having the choice of a valuable guaranteed level of income for life from age 55 or a guaranteed capital sum at the end of their chosen term. In addition, the plans offer the potential for client’s to increase the value of their guarantee through daily lock-ins of investment gains while enabling savers with the flexibility to start, stop and restart their income to suit their personal needs. 

Notes to Editors

  • Independent research for this report was commissioned by MetLife and conducted in August and September 2016 among nationally representative samples of 1,006 retired people and 1,141 employed people aged 45-plus and among 107 specialist retirement advisers.

 

Important information

  • The value of your client’s investment, and any income taken from it, can go down as well as up and they may get back less than they invested.
  • The MetLife Secure Capital Option provides a guaranteed death benefit or amount at the end of a chosen term. If your clients switch out or cash in their investment before the end of this term, they will receive the underlying value of their investment.
  • The MetLife Secure Income Option provides a guaranteed level of income for life and death benefit. If your clients switch out or cash in their investment they will receive the underlying value of their investment.
  • Tax treatment depends on your clients individual circumstances and may be subject to change in the future, with or without notice.

 

The references to “MetLife” are general references to the group as a whole and not to specific entities within the group. MetLife in the UK comprises a number of different companies.

MetLife Europe d.a.c. is an Irish insurance company based in Dublin with Dirk Ostijn as Chief Executive Officer. MetLife Europe d.a.c. provides financial products into the UK via its UK branch, of which Dominic Grinstead is the branch manager.

MetLife Europe Services Limited is an Irish services company, which distributes MetLife Europe d.a.c.’s products to Independent Financial Advisers via its UK branch. Key personnel within the UK branch of MetLife Europe Services Limited are Simon Massey, Wealth Management Director, Tom Gaynor, Employee Benefits Director and Claire Oldstein, Marketing Director.

MetLife Europe d.a.c. (415123) and MetLife Europe Services Limited (472359) are incorporated in Ireland and are authorised by the Central Bank of Ireland and subject to limited regulation by the UK Financial Conduct Authority and Prudential Regulation Authority. The registered address of both companies is 20 on Hatch, Lower Hatch Street, Dublin 2, Ireland and the UK branch address for both companies is One Canada Square, Canary Wharf, London E14 5AA. Website: http://www.metlife.co.uk

MetLife Europe d.a.c. is affiliated with US-based MetLife, Inc. (NYSE: MET), which through its subsidiaries and affiliates (“MetLife”), is one of the largest life insurance companies in the world. Founded in 1868, MetLife is a global provider of life insurance, annuities, employee benefits and asset management. Serving approximately 100 million customers, MetLife has operations in nearly 50 countries and holds leading market positions in the United States, Japan, Latin America, Asia, Europe and the Middle East. For more information, visit www.metlife.com

For further information, please contact:

Jo Riddell
Head of Communications, UK, Ireland and Europe, MetLife