Retirement Advantage says that the new ‘hybrid’ retirement solutions have quickly become mainstream as new research points to around 8 out of 10 advisers having either used the new products or are actively considering doing so. The research suggests that the new pension freedoms have resulted in advisers looking to hybrid income drawdown-annuity products as the norm, rather than the exception.
Hybrid solutions offer a blend of income drawdown and guaranteed income, usually provided by annuities.
However not all advisers have adopted hybrid pension products. Some 18% of advisers said they were aware of the products but had not yet considered then and 1% had considered but had no plans to use them. Some 5% said they were unaware of the products).
One in ten advisers confirmed retirement accounts had already become a key part of their retirement product toolkit, while 34% said they were likely to become so in the future. A further 38% of advisers said hybrid solutions were one of a number of possible solutions, but that didn’t mean they were core.
Advisers said a key benefit of hybrid solutions included the flexibility and greater client choice offered (52%), while sustainable income and guarantees were important for 25% of advisers. One in 10 advisers said that offering the best of both worlds of drawdown and a guaranteed income was important alongside the tax planning opportunities and better death benefits.
Andrew Tully, pensions technical director at Retirement Advantage, said: “As an industry we have seen little innovation in response to the pension freedoms, but one notable exception is the introduction of the new retirement accounts. These hybrid products, blending annuities and drawdown in one product wrapper, neatly bridge the gap between the two approaches to retirement, providing a cost effective solution for a wide range of clients.
The report was based on a survey by lluminas for Retirement Advantage among 107 advisers. Fieldwork was carried out from 23 May - 14 June 2016.