Connect with us

Top Stories


  • 63% of consumers intend to pay for advice from an IFA on how to access their pension pot, yet half  have pension pots of only £40k or less;
  • Guaranteed income and tax efficiency are the top priorities in pension investment decisions;
  • Simplicity of the product and dependants security rank lowest in importance;
  • Only 16% of pension pots will be invested in an annuity

The UK annuities market could decline by up to 75% after the recently announced changes to compulsory annuity purchase come into effect, according to PwC analysis supported by a new consumer survey.

The survey, which looks at consumer behaviour of people aged 50-75, reveals that 63% of consumers have or intend to ask for financial advice from an IFA on how they will access their pension pot. With half of respondents having pension pots of under £40,000, this questions the affordability of advice, and IFAs may not be able to provide value for money for small pension pots.

Results also show that the most important factors for consumers deciding how to manage their pension pot are having the certainty of a guaranteed income for life, followed by tax efficiency. Having a simple and understandable product ranked surprisingly low, just higher than dependants having security after death, which respondents considered their lowest priority.

PwC UK insurance leader, Jonathan Howe, said:

“It was clear that life insurers were in for a shake-up following the recent annuity announcements, but our survey quantifies the scale of the effect on the life industry. People still want to invest a small part of their pension pot in an annuity, but it’s crucial that insurers offer innovative new products to satisfy their customer demands and to fill the hole left by up to a 75% fall in annuity sales.

“63% of consumers have or intend to ask for financial advice from an IFA on how they will access their pension pot, which is likely to account for the low ranking in importance of having a simple product. However, the key point here is that many consumers may not have a big enough pension pot to justify significant advice fees, particularly as since the Retail Distribution Review came in last year IFAs now have to charge fixed service fees to customers. What we will see is an advice ‘black hole’ – a supply gap between what consumers want and what they can get. The Government’s free guidance will no doubt have its limits, and consumers will turn to their product providers for help in deciding what to do.

“This is a good opportunity for financial institutions to react to customers and to offer new products and services that suit their needs. Our survey shows that over 50% of people still want to buy products offered by financial institutions, and given the key focus on guaranteed income for life, insurers’ expertise in the area of longevity risk will be key.”

Editorial & Advertiser disclosure
Our website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.
Global Banking and Finance Review Awards Nominations 2021
2021 Awards now open. Click Here to Nominate


Newsletters with Secrets & Analysis. Subscribe Now