Will the drawdown revolution hike advisers’ admin burden?
The predicted drawdown explosion post-April 2016 is an “excellent opportunity” for advisers, writes David Hughes, but can it be done without administration overload?
It has been widely recognised that greater flexibility and simplicity in the pensions market were long overdue and the announcement of more 'pension freedom' in March has been welcomed by many.
Since the announcement of these changes in the Chancellor's 2014 Budget, there has been an increase in demand for financial advice as those moving closer to retirement explore their new options.
As we move closer to April 2015, advisers have told us they have two main priorities: ensuring they are in a position to offer clients a retirement product that they really want, and doing this without adding volumes of paperwork.
The months leading up to April next year will be interesting as advisers arm themselves with the pension products needed to meet new demand. While annuities are attractive in some circumstances, providing a guaranteed income for the entire lifetime of the policyholder, the government admitted in its 'Freedom and choice in pensions' publication: "As the nature of retirement changes, annuities are no longer the right product for everyone."
We all know that people are living longer and their needs are becoming more varied. Annuities have also suffered from a lack of competitiveness and innovation, in many cases offering a poor deal for consumers. What the market requires is greater freedom and flexibility to choose a solution that is right for individual circumstances. Advisers will have a crucial role in navigating their customers through the changes and identifying the best options for them. For many, this will be income drawdown.