How can we make retirement better?
The latest Rethinking Retirement in the UK report looks at how we can help retirees plan the best retirement they can, and identifies four things the industry could do better.
Greater retirement protection for you
Sadly there will always be a small number of people who die early in retirement. These customers will not get anything like as much out of their annuity as they put in, and that can weigh heavily on their minds.
Customers can purchase optional guarantees so their annuity continues to pay out to their family or estate for a fixed period of time when they die. But we want to offer customers more certainty with minimal impact on their retirement income. That’s why we‘re the first annuity provider to introduce as standard:
· Annuity Value Protection – if a customer dies within 90 days of buying their annuity, and any dependant named on the policy dies before them, we will return their annuity premium to their estate (minus any payments already made). Unfortunately Value Protection isn’t currently available in the Isle of Man or Channel Islands.
· A one year guarantee on our annuities as standard – if the customer dies in the first year of the policy, we will continue to make annuity payments to their dependants or estate for the rest of the first year.
A move to personalised retirement incomes
At Aviva, we believe everyone should get an annuity that’s right for them. We think all annuity providers should offer annuities based on customers’ personal circumstances. Knowing more about customers only ever leads to them getting a higher retirement income, never lower. So providing full information helps customers get the best retirement they can.
We’d also like to see all annuity providers publishing their rates. This would make it even easier for customers to compare their options and choose the best annuity for them.
The right advice, guidance and support at retirement
When it comes to buying a retirement income, there are two main options:
1. Buy through an advised service – customers get full, professional advice plus recommendations from a qualified financial adviser. Financial advice is a regulated profession so customers who feel they’ve given incorrect advice can refer their case to the Financial Ombudsman Service in the event that they’re unable to resolve any dispute with their adviser. Financial advisers charge fees for their services, and new rules introduced this year aim to make the cost of full advice clear so people know what they’re getting and how much it will cost.
2. Buy through a non-advised service – customers have their financial options explained to them and they’re provided with all the information they need to support them in making their decision. For the most people this is a very good way to buy an annuity, and it’s often less costly than paying for full advice. While an adviser doesn’t make any personal recommendations, there’s a robust process in place to help customers make a fully informed decision and select the right options to meet their needs.
It seems like a simple enough choice. But in reality it can be difficult to make sense of the different options and associated costs. That’s why we think all charges should be made crystal clear upfront – for advised and non-advised services. That way, customers can compare their options and understand if they are paying competitive costs for the right level of advice, guidance and support for their needs.
More ways to fund retirement
Recent decades have seen life expectancy across the UK increase at a surprisingly fast rate, but people aren’t saving more to prepare for a longer retirement – leading to a shortfall in retirement savings for many.
Our Real Retirement Report reveals that more of us are working past the traditional retirement age, but this can only help people make ends meet for so long. Sooner or later, everyone is ready to stop working and start to enjoy retirement, which means people need more ways to fund retirement. One option is to release equity from property, which more and more people are doing.
Equity release products are evolving as people’s needs change, and we support the Equity Release Council’s call for the government to give ownership of equity release as an overarching issue to a single government department.
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