98% of advisers see dim future for annuities

One in three (34%) advisers believe that risk-managed funds will overtake the traditional annuity as the leading retirement income strategy over the next ten years.                                                     

However, according to Aegon’s second Readiness Report last month, two in five people (40%) still say they would like a guaranteed income in retirement, with a further one in three (30%) likely to opt for a combination of guaranteed income and a cash lump sum.

At a time when annuity sales are declining rapidly, this suggests that flexible guarantees, which provide a secure income in retirement, will rise in popularity in 2015 and beyond. Indeed over one in four (28%) financial advisers foresee that guaranteed investment strategies will become the top choice for providers, advisers and consumers by the time we reach 2025.

Nick Dixon, Investment Director at Aegon said:

“Advisers are ideally placed to understand the changing needs of the investor, and it’s clear that most now think some form of income drawdown or phased retirement will overtake traditional annuities before long. Flexible guarantees, risk-managed funds, and income funds are all becoming central to advisers’ toolkits as their clients look to take advantage of the new flexibilities, and with this greater flexibility the onus is now on providers to present the investment strategies that reflect this shifting landscape.

“The changes we’ve made deliver against the shifting ideals we’ve seen from consumers and we will continue evolving and innovating to ensure we offer the best retirement outcomes for advisers and their clients. The jury is out on exactly how the land will lie in 2015 and beyond, but there is a good indication that investment strategies will change to suit investor needs in the early part of 2015.”