* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download Conventional annuity solution
Survey
Document related concepts
Present value wikipedia , lookup
Business valuation wikipedia , lookup
Financialization wikipedia , lookup
Conditional budgeting wikipedia , lookup
Financial economics wikipedia , lookup
Land banking wikipedia , lookup
Systemic risk wikipedia , lookup
The Equitable Life Assurance Society wikipedia , lookup
Investment management wikipedia , lookup
Public finance wikipedia , lookup
Negative gearing wikipedia , lookup
Investment fund wikipedia , lookup
Time value of money wikipedia , lookup
The Millionaire Next Door wikipedia , lookup
Pensions crisis wikipedia , lookup
Transcript
©UFS Providing greater certainty in retirement An insight into a growing market Richard Sheppard Malcolm Tyrrell Agenda Learning Objectives What is it like being a Pensioner? What’s the Problem ? Two sides to a Solution Summary Learning Objectives • Consider how the world of pensions has changed in recent years • Outline the many risks of pensions saving • Outline the many risks of taking an income from a pension • Discuss appropriate questions to cover in the fact finding process • Communicate both potential benefits and risks more effectively with clients • Highlight where long held perceptions no longer hold true • Explore how advisers can look to offer clients the secure retirement they wish for What’s it like being a pensioner? Source: Living Standards, Poverty and Inequality in the UK 2013 - ONS Pensioners are now less likely to be Bottom 60%+ fall into bottom two quintiles Source: Living Standards, Poverty and Inequality in the UK 2013 - ONS >40% Income Sources for Pensioners Source: Living Standards, Poverty and Inequality in the UK 2013 - ONS One million over 65’s working Source: Labour Force Survey ONS 12th June 2013 What is pre and at retirement? Worry and Expectations Hope £24,7000pa 63% not investing at all 57% Expectation £259,000 not willing to take any risk Reality £525,000 19% willing to take higher risks to achieve higher returns Source: Blackrock Investor Pulse Survey 2013 22% feel comfortable investing in the stock market The greatest risk to a clients financial future? Top four concerns 46% Domestic Economy 31% Spending more than I earn 28% Job security 38% 28% Oil and Energy prices of investors would move out of cash if they could guarantee their investment Source: Blackrock Investor Pulse Survey 2013 Investment solutions for today’s market climate Source: DataStream, BlackRock. Data is based on back-tested, simulated volatility until inception and then is based on realised allocations (inception date 10/02/2012, shown approximately on chart by dashed line). Data correct as of 31/05/2013. Simulated performance shown is calculated net of a TER of 0.24%. Volatility is defined as the annualised standard deviation of realised daily returns over the previous 60 business days. 12 Decumulation disaster for many The alternatives • Do nothing and carry on working • Income drawdown – flexible or capped • With-profits annuities • Phased Annuitisation • Fixed Term Annuities • Value protected annuities (tax, inflexible?) Retirement Income Planning in 2014 Conventional annuity solution Standard LTA Enhanced Annuity Fixed Term Annuity solution (a type of capped drawdown) Maturity Options Asset-backed annuity solution With Profits Unit Linked Drawdown income solution Capped Flexible Retirement Income Planning in 2014 Conventional annuity solution Standard LTA Enhanced Annuity Fixed Term Annuity solution (a type of capped drawdown) Maturity Options No investment performance risk during the term* Asset-backed annuity solution With Profits Unit Linked Drawdown income solution Capped Flexible Investment performance risk * Just Retirement’s Fixed Term Annuity has no investment performance risk during the term, provided it is held to maturity. Today we will discuss • • • • • • What is FTA? The retirement advice process: where does FTA fit? The importance of fact finding Who is Fixed Term Annuity right for? Where FTA may not be appropriate Our Support Selecting an income Maturity Options Fixed Term Annuity Maturity Options Keeping client options open Conventional annuity solution Fixed Term Annuity solution Asset-backed annuity solution Any UK retirement income product Drawdown income solution The complete fixed term annuity solution? Fixed Term Annuity Any UK retirement income product Maturity Options Keeping client options open Conventional annuity solution Fixed Term Annuity solution Asset-backed annuity solution Drawdown income solution The UK’s First Fully Flexible Conversion Feature What does this mean? Any UK retirement income product Any point in time Any reason deemed suitable by adviser and client Just Retirement’s FTA conversion feature requires Plan Protection to be selected Exploding some myths Holding Vehicle Focus on circumstances which would make Fixed Term Annuity appropriate Changing Circumstances – what may happen? Keeping options open as a holding vehicle = client value The discovery process Very Important Guaranteed Income Fairly important Of Some importance a a Death Benefits a Fund Growth Maximum Income a Regular Reviews a a a Inflation linked Flexible Income Control Not important a Case Study: Jeremy, 59 and Jane, 59 Guaranteed Personal Maturity Pension Amount £102,500 Occupational DC Pension £190,000 Example is merely a guide to where FTA may or may not fit into the advice process . It is for illustration purposes only and is not based on a real life example. £76,875 Fixed term annuity £25,625 Deeds Who may now want to consider an FTA?...... Younger retirees Where tax free cash and no income required Cautious drawdown clients FTA Those seeking a longer term and better yield Income flexibility Anticipating inheritance Where FTA is not appropriate. Case Study: Alan £50,000 Example is merely a guide to where FTA may or may not fit into the advice process . It is for illustration purposes only and is not based on a real life example. Deeds Unlikely to be appropriate for Only source of income Reach retirement age with only one source of retirement income. To avoid future lifetime annuity rate risks will purchase a lifetime annuity Enhanced already Suffering with a significant health condition that qualifies for an enhanced lifetime annuity Secure income Looking to make a once-andfor-all decision on the shape of retirement income. Removing all future investment performance risk and future flexibility from pension fund Examples are merely a guide to where FTA may or may not fit into the advice process . They are for illustration purposes only and are not based on a real life examples. Supporting You Retirement Income Planning in 2014 Conventional annuity solution Standard LTA Enhanced Annuity Fixed Term Annuity solution (a type of capped drawdown) Maturity Options No investment performance risk during the term* Asset-backed annuity solution With Profits Unit Linked Drawdown income solution Capped Flexible Investment performance risk * Just Retirement’s Fixed Term Annuity has no investment performance risk during the term, provided it is held to maturity. Retirement Income Planning in 2014 Conventional annuity solution Standard LTA Enhanced Annuity Fixed Term Annuity solution (a type of capped drawdown) Maturity Options No investment performance risk during the term* Asset-backed annuity solution With Profits Unit Linked Drawdown income solution Capped Flexible Investment performance risk The Unit-Linked Guarantee (ULG) Market The long term nature of the guarantees mean that financial advisers need to give consideration to the provider behind the guarantee. Source: A guide to Unit Linked Guarantee Products, Defaqto, August 2013 Three Considerations • Providing ULG solutions in the UK since 2007 • Weathered market storms when competitors withdrew from ULG market. • Over 85% of ULG pension market share3 Heritage Length and breadth of experience Poor’s1 • A+ Standard & • B+ AKG Actuaries and Consultants Ltd2 • Continuously investing and expanding - during some of the toughest markets 1Affirmed Strength Financial strength Resource Expertise and capacity • Over 50 on-the-road guarantee specialists • Supporting over 5,000 Advisers in the UK. • Company of the Year 2010 and 2012 in the Financial Adviser Service Awards 28 June 2012.2 October 2012 3 Based on the total 2012 market size from the Towers Watson variable annuity sales survey and MetLife calculations of 33 its new business premium proportion. Source: A guide to Unit Linked Guarantee Products, Defaqto, August 2013 Size of the ULG Market £1.41 billion UK ULG Market 2012 £1.41 billion £923.8 million £923.8 million UK ULG pension market 87.5%* 87.5% MetLife’s market share of ULG pension new premiums *Based on the total 2012 market size from the Towers Watson variable annuity sales survey and MetLife calculations of its new business premium proportion. Back to Basics Source – Yahoo Finance, 6th January 2014 2007 – 6620.10 Today? Who may want consider a ULG? Clients wishing to retire in the near future Those wanting to ensure their income outlives them Cautious drawdown clients ULG Investors wanting income certainty from their pension fund Those with a low capacity for loss Clients keen to protect their family if something happens Meet Richard I think I’ll buy an annuity with my pension fund but I don't want its value to fall before I retire Client: • Richard aged 50 • Married, three children Existing schemes: • Numerous pension pots totalling around £100,000 • His employer is looking at AutoEnrolment Objectives: • Wants to consolidate to see his total pension saving under one roof • Wants to ensure value from his contributions • What I’ve built up I don’t want to lose • Plans to make a further decision at age 60 Recommendation • MetLife Retirement Portfolio : • Secure Capital Option Capital Guarantee in Action Meet Richard….again I want to stay invested so I can grow my pension but I’m still concerned about stockmarket losses Client: • Richard is now aged 60 Existing schemes: • Pension fund now £200,000 Objectives: • Has decided to carry on working and so does not want to access his pension for his income at this stage • Wants to know about income levels though – what can he expect from his fund? Recommendation: • MetLife Retirement Portfolio • Secure Income Option (deferred) Deferred Income Guarantee Richard 3 I want to take an income from my pension savings now Client: • Richard is now aged 65 Existing schemes: • Pension funds now at £215,000 • Secure Income Base at £XXX,XXX with an income rate of 4.5% payable as a guaranteed minimum for life Objectives: • Wants to finish working now and take an income • Wants to be in a position to leave something for his family if he dies • Wants to make sure the income can be paid for the rest of his life Recommendation: • MetLife Retirement Portfolio with Secure Income Option (immediate) Learning Objectives • Consider how the world of pensions has changed in recent years • Outline the many risks of pensions saving • Outline the many risks of taking an income from a pension • Discuss appropriate questions to cover in the fact finding process • Communicate both potential benefits and risks more effectively with clients • Highlight where long held perceptions no longer hold true • Explore how advisers can look to offer clients the secure retirement they wish for Protect, Repair and Recover • We protect your clients investment • We repair their confidence in equity markets • We allow their investment to recover its value Supporting You • Many documents on our stands • Lots more on our website • Regional workshops • Follow up meetings In Summary • The world of pensions has changed in recent years • There are many risks of pensions saving • There are many risks of taking an income from a pension • We discussed the appropriate questions to cover • We considered both potential benefits and risks • We have explored how advisers can look to offer clients the secure retirement they wish for Important information This presentation has been provided to recipients for information only and has not been approved as a financial promotion. Notwithstanding the foregoing, this presentation is only being provided to professional financial advisers. This presentation does not constitute an offer or inducement to purchase or subscribe for securities in a product or fund. The information in this presentation may not be complete and may be changed, modified or amended at any time and is not intended to, and does not, constitute any representations and warranties of MetLife Europe Limited. The information contained in this presentation is intended to provide general information only and does not take into account individual objectives, financial situation or needs. Please remember, if a guarantee option is not selected the value of investments can fall as well as rise. An investor may not get back the amount invested. Past performance is no guide to future performance. Investments in MetLife products are not like a bank or building society which accrue interest. All reasonable care has been taken in relation to the preparation and collation of this presentation. Except for statutory liability which may not be excluded, no member of MetLife accepts responsibility for any loss or damage resulting from the use of or reliance on this presentation by any person. The information is taken from sources which are believed to be accurate but no member of MetLife accepts any liability of any kind to any person who relies on the information contained in it. The copyright of this presentation and any documents supplied with it and the information contained therein is vested in MetLife. They should not be copied, reproduced or redistributed without prior consent. MetLife Europe Limited (trading as MetLife) is authorised by the Central Bank of Ireland and subject to limited regulation by the Financial Services Authority. Details about the extent of our regulation by the Financial Services Authority are available from us on request. Registered address: 20 on Hatch, Lower Hatch Street, Dublin 2, Ireland. Registration number 415123. UK branch address: One Canada Square, Canary Wharf, London E14 5AA. Branch registration number BR008866. Web Site: http://www.metlife.co.uk