New products have already begun to emerge from the likes of Schroders, Liontrust and Threadneedle, but Altus said: “We could be about to see the Betamax moment for pensions, with some great ideas not really catching on.
“We believe that in the new world, no single product will dominate but drawdown in one form or another will form at least part of most people’s retirement income. Pension plans will rise in popularity generally, as more people realise they have become easier to access and provide a great way of passing on wealth between generations,” it added.
In the first three months following the 2014 Budget statement, individual annuity business amongst ABI membership fell more 48% by volume, and 42% by value, Altus said and “Early indications from Q3 data suggest steeper falls of 60% to 70% compared to the same quarter of 2013.”
On the other side of the coin, drawdown sales in Q2 2014 have grown around 55% since the first quarter, the group said.
Yet, despite this, Altus points out, while costs and charges have come down and are likely to continue to do so, understanding of the various options is lacking, which presents great opportunities to advisers that are able to help clients navigate the new landscape.
But, it warned: “Much will depend on how advice is sign-posted by The Pension Advisory Service (TPAS), as well as how advisers themselves are perceived and valued by the public.
“The advice industry is in a phase of rebuilding since RDR – adviser numbers have continued to recover since January 2013, with an increase of around 7% in the first year following introduction of the new rules. This is an encouraging sign; however a quick internet search for “FCA fines adviser” still brings up a haul of recent, hefty penalties and a handful of total bans for some IFAs. It’s a huge shame, because retirement planning is one of the most valuable services an IFA can offer any customer,” it added.
