1st July 2014

AxA life invest: Decisions, dilemmas, predictions and change

The Government’s recent “freedom and choice in pensions”  consultation predicts that pension reforms will allow providers much greater freedom to innovate and create solutions which better meet the evolving needs of consumers and their spending patterns in retirement. The traditional decisions, dilemmas and predictions that clients faced at retirement are now more prevalent than ever and it is vital that the greater choice  delivered by these proposals translates into better customer outcomes.

Dilemma – should I grow or protect my retirement fund as I approach retirement?

Predictions – annuity rates are falling. What will they be when I retire, or will they even exist as we know them in years to come?

Dilemma - Should I grow or protect my retirement fund as I approach retirement?

Unfortunately, many clients haven’t saved enough into their pensions, so they may need to continue to have exposure to risky asset classes up to retirement and beyond. The fact that life expectancies are continuously increasing and we expect that income drawdown will become the default option of choice for clients retiring, means clients will need to invest in real assets for far longer than before. Consequently, the traditional strategy of Lifestyle profiling or de-risking is broken, as this assumes that clients are going to annuitise, which is no longer the default option. Clients need to consider an investment strategy which offers growth potential combined with a protection element, for times when market volatility is high. 

Predictions - What will annuity rates be when your client retires?

In addition to the existing pressures that have been well documented on annuity rates over the last 15 years, there will be new pressures as a result of the inevitable reduction in the number of providers in the market following the budget changes. If we look to Australia, a country which already offers greater flexibility on accessing pensions, only 20 life annuities were sold in 2009₁. This begs the question whether annuities as we know them will continue to exist for future retirees. Yet equally we know that many clients still require income security in retirement.

AXA Life Invest have spent the last 18 months researching and developing a solution which can offer higher levels of guaranteed income in the early years to meet the needs of retiring clients, and better reflects their spending patterns in retirement.

Throughout this time AXA Life Invest has made clients the focal point of their thinking. They asked clients like yours to identify the issues they had encountered along the retirement journey and have designed a product that would help them to overcome these challenges.

As a business, AXA Life Invest made the decision that change was necessary and desired by the market.

The result is the enhanced Secure Advantage+ Pension Plan. The innovative and unique “Income Reward Guarantee” offers up to 6.75% income at age 65*,combined with an investment strategy which accommodates growth potential with a protection element when market volatility is high. So if you want to learn more about how this strategy can meet the needs of your clients in a post-Budget environment then please contact them on 0800 368 0220 or email them. 

Pensions