Dunstan
Thomas sees significant demand for new at-retirement consumer
tool geared for ‘pension freedom’ world
27 March 2015
Dunstan Thomas, the retirement market solutions
provider, announced today it has been working with two
major Direct to Consumer (D2C) platform operators to
roll out a new online toolset designed to help
consumers, who are approaching retirement, to navigate
more difficult choices in a post-Freedom Day world.
Dunstan Thomas has seen particularly strong demand for
its new tool geared to helping consumers explore all
their new options at-retirement in the wake of Freedom
Day on April 6th. The tool, called
Imago Self Direct
Decumulation, enables consumers to review their
retirement savings progress as they near retirement.
They will be able to input total retirement income
target and explore decumulation options including taking
of Tax Free Cash, cash lump sums, Drawdown or buying an
annuity. They can set planned dates for starting
drawdown or purchasing an annuity. They can also explore
hybrid decumulation options in which several choices are
explored alongside each other.
‘Freedom and
choice in pensions’, first announced in the Chancellor’s
Budget Speech a year ago gives consumers a great deal
more choice over what they do with their retirement
savings from the age of 55. Up until this announcement
nearly 90% of us bought an income for life called an
annuity when we reached retirement. Most were
‘defaulted’ into buying the annuity which their existing
pension provider offered and some were poor value. The
remainder went into drawdown where income was taken in
small regular amounts in line with GAD (Government
Actuarial Department) limits designed to prevent people
running out of money later in retirement.
But
from next week the options available to consumers will
include taking it all out in cash (and perhaps paying a
large tax bill in the process), buying an annuity or
going into drawdown. Others may choose to take lots of
smaller lump sums while keeping the bulk of the pension
invested.
Natanje Holt, managing director,
Dunstan Thomas, said: “We took the view that after
Freedom Day consumers would need highly intuitive online
tools to help them weigh up their at-retirement options
before taking the plunge. You cannot underestimate how
much support is needed to do get consumers engaged in
these complex decisions, especially as many more people
are not being advised by an IFA and the guaranteed
guidance regime (which TPAS and the Citizens Advice
Bureau is providing) will be bursting at the seams.”
The
Imago Self Direct
toolset is built on the mature, resilient and robust
calculations engines and IT infrastructure of
Imago Front Office
which already has more than 30 customers including some
of the largest providers and platforms in the retirement
market.
Imago Self
Direct will go live on two major D2C platforms
during the next month. Several more platform providers
are evaluating the toolset. You can view a mock-up of
Imago Self Direct
Accumulation here and
Imago Self Direct Decumulation here
Notes to
Editors:
Third Party Administrator Hyman Robertson
calculated that some £6 billion of assets is heading for
the one-way exit door between April and July 2015 alone.
A more recent Censuswide consumer survey found some 40%
of people were planning to withdraw all or part of their
pensions as soon as they are allowed. This chimes with a
BlackRock January Investor Pulse survey which found 43%
of consumers planning to take some of their pension pot
in cash.
The national media has also been
gnashing its teeth about a potential boost to already
over-inflated house prices as, according to the same
Blackrock study, some 17% of retirees are planning to
crystallise all of their pension assets in order to move
their money into other assets geared to delivering them
an income in retirement, notably property.
Others are studying the levels of pension assets being
‘held back’ by Freedom Day. These are the amounts which
we know are pending for crystallisation post April 6th.
Apparently about £5bn of assets which would ordinarily
have gone into annuities already, are currently sitting
in the pending (crystallisation) tray. There is
conjecture that in the next tax year from April 6th
there may be as many as 540,000 pension holders looking
to cash out, considerably higher than the Government’s
upper level estimates which were 320,000.
If
volumes are this large it is unlikely that everyone will
make wise financial decisions. It is against this
backdrop that Dunstan Thomas has invested heavily in its
Imago Self Direct
Toolset. You can join the debate on our LinkedIn page
For more information on
Imago Self Direct
Read More