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Starting line for flexibility in pensions

28th Oct 2014

Without exception every major life company in response to the budget is looking to substantially enhance their planning and modeling tools for customers and advisers.  6 April 2015 represents the starting line for everyone to be ready with their proposition – those not there will be at a disadvantage.  However, the race has already started since customers looking to retire in April will be considering their options in the run up to that date.


Generally, insurers’ priorities are to existing customers who are close to retirement (i.e. those that would be in the traditional ‘wake up’ process).  This group represents the best prospect for revenue and the best group to test a provider’s retirement service before promoting the service to the wider market.  Pre-budget, the strategy of many leading insurer’s may have been to enhance their annuity offering.  Now the aim is to retain funds through a range of products; primarily Annuities and Drawdown, but also extending to NISAs and (possibly) Equity Release.


However, even when narrowed down to Annuity and Drawdown products, the future freedom over pensions makes for a complex decision making process.  Few customers will be able to afford advice (or be unwilling to do so) as by far the majority will have pot sizes less than £80,000; the key target group being Middle Britain who previously would have defaulted to annuity purchase. In addition to offering support to advisers, a provider’s retirement service also needs to add value above the mandatory sign posted Guidance Guarantee.

Whilst helping customers to make the right decisions for their circumstances, it is the objective of the provider that ultimately customers action their plans with them.  It would be a failed process, if a retirement service demonstrated that the provider can meet the needs of the customer, but they then decide to go to another provider.  Customers in their decision making process should therefore access planning tools that fully reflect the provider’s offerings.  Additionally, a provider must support a continuous process from decision to product fulfillment to prevent inertia taking hold.


CTC’s view is that providers implement a retirement service that uniquely represents their values and their products.  The immediate target would be existing customers from Middle Britain making basic decisions about retirement income (generated from annuities, phased and flexi drawdown).


CTC is uniquely placed to support such a service.  The tools we provide can be implemented rapidly and we have the agility to evolve a retirement service.

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