Consumers' pension freedom
The annuities market is undergoing the most fundamental shift in its history.
The first challenge for market participants is to better understand how savers are likely to respond to the new rules in April 2015.
Every year, 320,000 savers with a DC pension pot retire. The incoming pension freedoms will empower them to make choices about their retirement options. This opens up new opportunities for firms that understand what consumers want, and can innovate to meet their needs.
Deloitte analysed a syndicated survey by YouGov (see methodology) of 3,314 savers to understand what they will do with their incoming pension freedoms and, more broadly, what they need from the pensions industry.
The key findings of the survey highlight that:
- information and advice to help savers understand what to do with their incoming pension freedoms is critical
- information and advice must be engaging enough to overcome a widespread lack of interest in pensions
- customers with different levels of wealth are surprisingly similar in what they want from pensions
- a single solution would not take account of observed differences between customer segments.
The most common response to the question 'what will you do when you retire?' was 'I'm not sure'
Proportion of savers who know how much retirement income they will need to be comfortable
Half (49 per cent) of savers admit they do not know how much pension income they will need to be comfortable in retirement.
Top five goals and intentions for savers
The most important pension goal for savers, wanted by 59 per cent of all savers, is to have a guaranteed income in retirement.
Pension features for which demand is similar at different levels of household income
The view from Deloitte
"The pension industry needs to consider how to meet savers' needs. While there is quite a lot of uniformity in what savers say they want, a single solution would fail to take into account some clear differences between savers. At the top-end, solutions should be tailored to financial objectives; but, for the majority, hand-holding is more important."
Andrew Power, Insurance Strategy, Deloitte