What are the biggest challenges faced by today’s retirees?
Pension freedom turned retirement planning on its head. All of the risks are now shouldered by the individual, and the danger of either outliving your savings or not spending enough are all too real.
Striking the right balance to maximise the opportunities now available – certainly without advice – is nigh on impossible.
Hear from Canada Life’s Andrew Tulley and other expert speakers at RP’s conference in London on 14 April. Find out more or book your place here
Drawing too much income too soon, cashing in pensions simply to put them on deposit, paying too much tax, ensuring your funds last as long as you do, falling prey to scams – these are all real risks and playing out across the market right now.
Without access to the right guidance and advice, it is all too easy to make the wrong decisions.
How does Canada Life aim to address some of those challenges?
We believe everyone should receive professional financial advice, and we need to continue to promote the value of that advice. In the vast majority of instances, a financial adviser will help a customer navigate the complexities of making the right decisions throughout the retirement journey.
We have a role to play through the development of more flexible products and solutions, alongside providing ongoing support and technical expertise to advisers. Technology is a clear enabler here of course, and tools can also help advisers serve clients.
By doing this effectively we can help advisers serve a broader range of clients more cost-effectively and create efficiencies – in turn enabling advisers to provide services to a wider range of clients.
What will be the most important consideration for the next wave of retirees?
As we witness the shift from defined benefit (DB) to defined contribution (DC), alongside the move from annuities to drawdown, responsibilities for the risks of retirement are moving to the individual. This is a fundamental shift away from the security of a guaranteed retirement income, but with that comes much greater responsibility.
As the DC market is still relatively immature, pension pots on their own are unlikely to provide sufficient retirement income for many people. This opens up a conversation about total wealth, including housing wealth, playing a key part in many people’s retirement plans in the future.
How do you see retirement changing in future?
It is clear future retirees will not be able to rely on DB pensions. Retirees will increasingly want to phase retirement, remaining active and engaged in work, perhaps moving to part time work, to work as a consultant or to offer to help in the voluntary sector. Cliff-edge retirements are no longer the norm. This introduces the demand for more flexible solutions that better match changing client needs and help across a range of assets and into the decumulation phase.
Expectations about retirement are very high. We are witnessing a golden era of retirement, with high levels of DB coverage, housing wealth at near-record highs and retirees in the main healthy enough to enjoy it. This is not necessarily going to translate into the same experiences for future generations, where pension savings are still at a low point – but growing with auto-enrolment, while younger generations are trying to manage cost of living challenges, getting a foot on the housing ladder and paying off student debt.
How is Canada Life preparing to meet those challenges?
One of the biggest changes arising from pension freedom relate to the advantages of intergenerational wealth transfer of pensions. The ability to cascade wealth through the generations, including pensions, tax-efficiently is a huge opportunity for advisers, and also companies such as Canada Life where we offer a wide range of flexible product solutions, tax wrappers and technical support.
You can hear more from Andrew Tully at the RP Forum in London on 14 June. To reserve your free place or to find out more about this special event, please click here