The independent financial research house said annuities, the traditional product choice for many clients, had been challenged by the recent Financial Conduct Authority thematic review and the Budget changes announced in March by chancellor George Osborne.
It said that unit linked guaranteed products (ULGPs) could however complement a client’s annuity and also support certain client requirements for access to guarantees going forward, while still maintaining some exposure to equity markets for future growth potential.
David Cartwright, head of insight and consulting for wealth and protection at Defaqto, said: “Despite the fact that new flexibility in the pace and level at which capital and/or income can be withdrawn from maturing pension pots will appeal to some clients, the bottom line for many will still revolve around a requirement, at least in part, for the provision of secure income payments of some kind to support their needs in retirement.
“For providers of guaranteed facilities across the retirement income market there will be continued opportunity to develop solutions to meet the client's requirement for secure income, and advisers will need to continue to appraise the benefits and potential suitability of these guaranteed solutions for their clients.”
Defaqto has produced a case study taking an in-depth look at ULGPs, their positioning in context within the retirement income product market and their potential application as a solution to meet certain client needs in retirement.
The company said “crucially, [the report] also reinforces four core tenets of retirement income planning which are as applicable now as they were before the Budget announcement in spring, those being:
• Helping clients understand their longevity outlook
• Helping clients understand their changing requirements during retirement
• Helping clients budget for their retirement
• Helping clients understand risk in retirement
To download Defaqto’s publication, the Case Study: Unit Linked Guaranteed Products in Retirement click here
