These changes affect only defined contribution (DC) schemes in the private sector. We must wait to see what the government may have in store for defined benefit or even public sector schemes. It would seem to me a step too far if members of these schemes are allowed to transfer to a DC arrangement and take it all as cash.
While it’s currently impossible to accurately predict what the Budget’s eventual ramifications may be, market speculation suggests that the annuity market could reduce from £12b to £4b as early as 2015. We have asked our Annuity Survey respondents to share their opinions and predictions in order for us to identify early trends in the pension and annuity industry’s responses to these changes.
We’ve also asked our survey respondents if they believe that this is a sign that annuities are no longer fit for purpose at retirement. And if this is the beginning of the end for annuities, how will drawdown products be positioned? Will those in receipt of their pensions savings recklessly spend their money and exhaust their pension pots too early, or will individuals be encouraged to engage more in making retirement choices due to the increased breadth of choices available? While it’s not yet known what the Government’s plans might be for enhanced annuities, we asked our respondents if all annuities should be underwritten in the future.
The Chancellor announced the Government’s intention to guarantee everyone with a DC pension free and impartial guidance on their financial choices for retirement, at retirement. We asked our respondents to give us their thoughts on the potential cost of this guidance and whether it will be practical or necessary to provide this guidance face-to-face.
The survey was launched immediately after the Budget announcement, and we expect a particularly strong response this year. The results will be published in early June. If you would like to see a copy of the survey results, please contact firstname.lastname@example.org or email@example.com.