BREXIT AND DEFINED BENEFIT TRANSFERS WILL BOOST GUARANTEED DRAWDOWN

  • Two out of three advisers believe Brexit jitters and DB transfer rush will boost guaranteed drawdown demand
  • Half of advisers forecast guaranteed drawdown market growth will accelerate over the next two years 

The Brexit process and growth in the final salary transfer market will be the key drivers in increased demand for guaranteed drawdown solutions over the next two years, new research* from MetLife shows.

Its study found that 65% of advisers believe the guaranteed drawdown market will benefit from the ongoing Brexit process as retirement savers look for solutions which can help combat investment uncertainty.

Advisers also highlight opportunities from the growing defined benefit transfer market as savers cashing in on rising transfer values for switching to defined contribution funds seek safer homes for some or all of their funds.

The MetLife research found 50% of advisers believe growth in the guaranteed drawdown market will accelerate over the next two years with the launch of new solutions from providers enhancing growth.

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The research – conducted as part of MetLife’s Quarterly Market Review being distributed to advisers – found 53% of advisers say they now feel obliged to offer guaranteed drawdown solutions to clients looking for investment security and 70% of advisers think that guaranteed drawdown products offer a lower-risk alternative than conventional drawdown or annuities.

Richard Evans, Intermediary Development Manager at MetLife UK said: “Retirement conversations need to change to include a wider range of options and the need for guaranteed drawdown is increasingly playing a central part in this discussion.

“Advisers clearly see guaranteed drawdown as offering security against a range of perceived threats, including Brexit, and as a method of hedging against taking too much risk for those transferring out of DB schemes.”

The role that guaranteed retirement income levels can play in encouraging people to save more is also highlighted by the research, with 52% of advisers believing that the presence of more guaranteed income solutions would encourage consumers to save more for their retirement.

MetLife’s range of retirement and investment solutions have been designed to meet the need for a guaranteed level of income for life in retirement or a guaranteed capital amount at the end of a chosen term, while providing customers with the flexibility to access their investment if needed.

Customers can choose from a range of investments to build a personalised plan suited to the levels of risk they are willing to take, while having the choice of a valuable guaranteed level of income for life from age 55 or a guaranteed capital sum at the end of their chosen term. In addition, the plans offer the potential for client’s to increase the value of their guarantee through daily lock-ins of investment gains while enabling savers with the flexibility to start, stop and restart their income to suit their personal needs.

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