Retirement reforms to force rethink of pension investment strategies
20 March 2014
Tony Clare, pensions advisory partner at Deloitte, said:
“The Chancellor's radical changes to pensions means that the default investment strategies of defined contribution pension schemes may no longer be suitable for schemes’ members.
“About 90% of members of defined contribution pension schemes do not move from default investment strategies, which automatically switch investors’ funds from equities to lower-risk cash and bonds as they approach retirement.
“The aim is to protect investors’ funds values before they are forced to buy an annuity. Now that savers are no longer forced to buy an annuity, pension scheme trustees will have to review whether these remain suitable for scheme members, particularly if savers decide to use income drawdown to generate a retirement income or indeed draw the full fund as cash at retirement.
“Scrapping the annuity rules is likely to lead to a huge growth in income drawdown, which we calculate could increase retirement income by about 15%.”
Notes to editors
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
Member of Deloitte Touche Tohmatsu Limited.
“The Chancellor's radical changes to pensions means that the default investment strategies of defined contribution pension schemes may no longer be suitable for schemes’ members"-Tony Clare, pensions advisory partner at Deloitte