STATE OF THE NATION OVER TWO LINES PENSIONS IN 2016 & 2017 - - PowerPoint PPT Presentation

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STATE OF THE NATION OVER TWO LINES PENSIONS IN 2016 & 2017 Presentation subtitle/presenter 23 October 2017 STATE OF THE NATION PENSIONS IN 2016 & 2017 Learning objectives Reflect on the key changes to pensions in 2016 and the

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OVER TWO LINES

23 October 2017 Presentation subtitle/presenter

PENSIONS IN 2016 & 2017

STATE OF THE NATION

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STATE OF THE NATION PENSIONS IN 2016 & 2017 Learning objectives

Reflect on the key changes to pensions in 2016 and the
ngoing effect for clients
Consider the changes likely to occur in 2017, and
Identify opportunities to assist new and existing clients

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LOOKING BACK

2016

1. Pension Freedoms

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£8.9bn OUT STATE OF THE NATION FREEDOM & CHOICE

£4.9bn £4bn

332,000 cash withdrawals 1.08m

drawdown withdrawals £6.5bn £9.5bn

121,000 annuities 131,800

drawdown plans

Story so far: £16bn IN

Source: ABI pension freedom statistics – The new retirement market: The evolution continues 11th April 2017

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FREEDOM & CHOICE PLANS FOR LUMP SUM

Source: FCA Retirement Outcomes Review Interim Report July 2017

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Source: ABI One year of freedom data 15 August 2016

FREEDOM & CHOICE INCOME DRAWDOWN Percentage withdrawn:

0% 2% 4% 6%

Q2 2015 Q3 2015 Q4 2015 Q1 2016

ABI RLI

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DRAWDOWN GOVERNANCE HOW MUCH ARE PEOPLE TAKING

Source: Royal London – ‘How much income are people taking?’, June 2016

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STATE OF THE NATION INCOME SUSTAINABILITY

10% 20% 30% 40% 50% 60% SUSTAINABILITY SCORE Q1 2016 PROPORTION OF PLANS CHANCE OF ACHIEVING A LIFETIME SUSTAINABLE INCOME

0 – 25% 25 - 50% 50 – 75% 75 – 100%

SUSTAINABILITY SCORE Q4 2016

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STATE OF THE NATION 5 main issues identified

Consumers fully withdrawing pension pots to

invest elsewhere – Lack of trust in Pensions

Early access – Path of least resistance
Non-advised drawdown customers may struggle

with the complexity of the decisions they have to make

Providers continue to withdraw from the open

annuity market

Limited innovation for mass market consumers

RETIREMENT OUTCOMES REVIEW – JULY 2017

Source: FCA Retirement outcomes review interim report July 2017

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STATE OF THE NATION 4 Remedies identified

Extra protection for consumers who buy drawdown

without advice

Giving consumers early access to their savings

without having to buy a new drawdown product

Making it easier to shop around for drawdown
Helping consumers understand their options

RETIREMENT OUTCOMES REVIEW

Source: FCA Retirement outcomes review interim report July 2017

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FREEDOM & CHOICE OPPORTUNITIES FOR ADVICE Consumers facing difficult choices: At retirement advice: DB to DC transfers:

Guarantees versus flexibility
Timing of withdrawals
Income sustainability

Demand for advice increasing:

DB schemes looking to reduce

liabilities

Transfer values at a current high

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LOOKING FORWARD

2017

2. AE review

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1 2017/18 terms Source: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/576423/review-of-ae-earnings-trigger-2017-2018.pdf

Non-eligible Jobholders

Earnings at staging date/date they become eligible Age at staging date/date they become eligible Age 16 Age 22 SPA Age 75 Non-eligible Jobholders Non-eligible Jobholders

AUTOMATIC ENROLMENT REVIEW ELIGIBILITY

Entitled Workers

Eligible Jobholders Lower contribution threshold £5,8761 Qualifying threshold £10,0001 Upper contribution threshold £45,0001

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1 - 2017/18 terms Source: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/576423/review-of-ae-earnings-trigger-2017-2018.pdf

Earnings at staging date/date they become eligible Age at staging date/date they become eligible Age 16 Age 22 SPA Age 75 Non-eligible Jobholders Non-eligible Jobholders

AUTOMATIC ENROLMENT REVIEW ELIGIBILITY

Eligible Jobholders Upper contribution threshold £45,0001

Non-eligible Jobholders Entitled Workers

Lower contribution threshold £5,8761 Qualifying threshold £10,0001

Contributions from £1

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AUTOMATIC ENROLMENT OPPORTUNITIES FOR ADVICE

Employers have a six month window to carry out re- enrolment:

Re-enrolment: Secondary market:

No postponement
Single AE date for all workers
Eligible opt-outs & scheme leavers

Chance to review scheme

Scheme design
Compatibility with payroll dates
Service & support

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STATE OF THE NATION PENSIONS IN 2016 & 2017 Learning outcomes

Reflect on the key changes to pensions in 2016 and the
ngoing effect for clients
Consider the changes likely to occur in 2017, and
Identify opportunities to assist new and existing clients

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THANK

YOU

The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions and is a member of the Association of British Insurers. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London EC3V 0RL. Royal London Marketing Limited is authorised and regulated by the Financial Conduct Authority and introduces Royal London’s customers to other insurance companies. The firm is on the Financial Services Register, registration number 302391. Registered in England and Wales number 4414137. Registered

ffice: 55 Gracechurch Street, London EC3V 0RL.Royal London Corporate Pension Services Limited is authorised and regulated by the Financial Conduct Authority and provides pension services.

The firm is on the Financial Services Register, registration number 460304. Registered in England and Wales number 5817049. Registered office: 55 Gracechurch Street, London EC3V 0RL.

September 2017 PR x PN 0001