- Guaranteed drawdown should be included as an option in guidance to help drive innovation
- Just one in 12 advisers would now recommend an annuity for savers with £50,000, research shows
The retirement planning industry needs to seize the opportunity of the Government's new flexible pension regime to help deliver improved standards of living in retirement for millions of savers, MetLife believes.
Up to 18 million people will be able to benefit from new rules guaranteeing free and impartial advice delivered by groups including the Money Advice Service and The Pensions Advisory Service with the Government pledging to amend tax rules to enable providers to create new retirement income products, the Treasury says.
MetLife supports the focus on innovation and believes the guarantee guidance highlight the importance of financial advisers. It wants consumers to be made aware of all retirement income options through the Government service including guaranteed drawdown (unit-linked guarantees) which combines the guaranteed income of an annuity with the ability to benefit from market growth provided by drawdown.
MetLife research* among specialist financial advisers shows currently just 8% would recommend annuities to clients with £50,000 in pension savings and 38% have recommended drawdown to some clients where previously they would have recommended annuities.
Nearly two-thirds (63%) have recommended delaying retirement planning decisions until after April 2015, MetLife's research shows.
Dominic Grinstead, Managing Director, MetLife UK, said: "The Treasury consultation has laid the groundwork for a retirement revolution which should enable the UK to create a world-leading pensions system.
"The focus on impartial advice is crucial and should include making consumers aware of all options including guaranteed drawdown as this will stimulate innovation across the market.
"Concerns remain about people outliving their pension income and that should be tackled by guidance reminding savers of the potential longevity risks of their retirement choices."
MetLife has already backed the pension reforms by reducing its minimum initial investment required for its market-leading unit-linked guarantees to £30,000** from £50,000. This will introduce a flexible alternative for clients who do not qualify to take their entire fund as a lump sum ahead of the wider changes coming into effect in April 2015.
MetLife's capital guarantee products enable customers to guarantee their capital in the run-up to retirement - initial investments after the payment of adviser charges are guaranteed and growth is locked in annually over the term. It also offers Protected Growth Funds which offer a choice of levels of protection between 70% and 90% with daily lock-ins of investment growth.
When customers want to take an income, MetLife provides products offering a guaranteed income for life with flexibility over when to start and the possibility of growth. From April 2015 customers will be able to take income when they want in line with planned legislation.
Notes to Editors
* Research conducted via NMG July Financial Adviser Census for MetLife among 284 financial advisers specialising in retirement planning
** Minimum initial investment is £30,000 after PCLS has been taken.
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 Limited is an Irish insurance company based in Dublin with Dirk Ostijn as Chief Executive Officer. MetLife Europe Limited 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 Limited's products to Independent Financial Advisers via its UK branch. Key personnel within the UK branch of MetLife Europe Services Limited are Dave Ewens, Sales Director, Claire Oldstein, Marketing Director and Tom Gaynor, Employee Benefits Director.
MetLife Europe Limited (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 Financial Conduct 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: www.metlife.co.uk
MetLife Europe Limited is affiliated with US-based MetLife, Inc. (NYSE: MET), which through its subsidiaries and affiliates ("MetLife"), is a leading global provider of insurance, annuities and employee benefit programs. MetLife 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:
Claire Oldstein +44 (0) 207 715 2300
Marketing Director, MetLife UK