With the introduction of the new pension legislation this April, savers have been afforded more freedom, but also more responsibility. Where once retirement incomes were guaranteed through the purchase of an annuity, now the onus rests on individuals to decide whether the annuity or drawdown route is best for them.
“To some people that’s really attractive,” says Equiniti Pensions Solutions’ Head of Product Strategy, Richard Llambias.
With a drawdown pension, whenever you die your fund remains in your estate. It won’t provide a guaranteed pension though; if you draw down too quickly you’ll run out of money.
RetireMe, a new mobile app developed by Equiniti Pension Solutions’, addresses this concern. Available through the App Store, it enables savers to model how long their funds will last based on time or annual drawdown.
For example, should the user enter a fund value and a desired annual drawdown value, he/she can see how long the fund will last. Alternatively, the user can see how much can be drawn down annually from the fund over a set period of time. Both scenarios automatically take into account adjustable growth and charge rates.
“We’re giving people a tool that they haven’t got at the moment,” says Richard. “If you’ve got £250,000 in your fund, that may feel like quite a lot of money. But actually, how long is that going to last? Nobody really knows, so we decided to help people understand how long their money will last.
Most people with a defined contribution pension are a little bit in the dark about what they are going to get in retirement. RetireMe gives them a much better understanding of how wealthy they will be in retirement, or how frugal they are going to have to be.
While Equiniti’s Compendia platform offers users a benefits modeller, it differs from RetireMe in that it is based on accumulation scenarios rather than decumulation. “With RetireMe, you are decumulating funds because you are starting to spend the money,” says Richard. “We don’t believe there’s anything else available out there.”
Moreover, RetireMe is a standalone consumer app, meaning that anyone – non-Equiniti customers included – can download and utilise it from the App Store. “It’s an exciting time for us. This definitely gives us an opportunity to say a little bit more about what Equiniti does to people who aren’t already customers.”
With its simple user interface and strong user experience, RetireMe is remarkably easy to use. This was a key focus of its development and a factor of its success, as was establishing an understanding of the app’s potential usership: “If you don’t know what a pension is and you’ve never heard of drawdown, then quite possibly the app isn’t for you,” says Richard. “But it does contains a number of information pages, and we’re also linking out to the government Pension Wise website – www.pensionwise.gov.uk – from within the app.
It’s not an advising tool, it’s an information tool, and we hope that RetireMe will inform and empower users to make important decisions about their retirement planning.”
More than ever, people need to be able to understand their pensions in order to work out when they can afford to retire. As such, RetireMe will prove invaluable not just for people coming up to retirement but equally for people mid-way through their careers who are planning for their futures and who need to be able to make informed decisions.
RetireMe is built around informing and empowering, and this is something Richard believes the app absolutely delivers. “At 40 years old, I can look at what a fund of £250,000 will give me at 60 or 65 and how long it will last,” he says, “but I might realise that I will have to start putting more money into it. That’s the sort of empowerment you get.”
Click here to watch our film about the App.