Roll over annuities, there’s a new kid in town. In fact there is a whole new generation of rollover retirement products in town, or there will be by the time April 2015’s revolutionary changes take effect.
Yet at the same time the organisations that have guided and fulfilled transactions for the unadvised thousands are in serious trouble. I’m talking about the execution-only annuity brokers, who took punters in their thousands from poor-value rollover product to reasonable value annuity. Yes they did it for a commission, but at least retiring employees of companies that had benefited from the services of a good quality EBC or corporate IFA knew they weren’t going to be ripped off.
With annuities now the billy-no-mates of financial services products, the world suddenly looks very different.
Will trustees and employers use the beard of acceptability of the guidance guarantee as the cloth on which to wipe clean their hands of all responsibility for the at-retirement decisions of their former charges? ‘If you don’t want cash or annuity, we recommend you have a 30-minute conversation with TPAS or CAB’, many will say, and then you are on your own.
And will we see thousands of retirees rolling over from the corporate product into a retail one with the same provider, but with double or even triple the charges?
Obviously things are developing very quickly, but the industry has a long way to go before it has a full suite of at-retirement solutions it can be proud of.
Sitting in on the judging of the Corporate Adviser Awards provider categories this week with a group of leading intermediaries it has become clear that what passed for a great group pension in the past does not necessarily hold true going forward. Increasingly advisers are going to rank providers on the basis of their flexible features and their ability to look after employees as they transition into retirement.
