The Weekly Wrap: August 28 edition
A round-up of the pensions industry stories published across the FT Group this week – from the market correction highlighting drawdown risks, to fewer people planning to use pensions to clear their mortgages.
Almost all advisers predict state pension will change again
Key stats
- 96 per cent of advisers predict state pension will change again
- The cost of transferring pension liabilities to insurers after Solvency II is predicted to rise 10 per cent
- 631,000 people in the UK intend to use their pension to clear their mortgage balance
FTAdviser: Only 4 per cent of financial advisers believe the single-tier state pension – which will be implemented in April 2016 – will be unchanged in 30 years' time. Of the 208 advisers surveyed by pension provider Aegon UK, 39 per cent predict it will revert to means testing, 41 per cent expect the triple lock system will be removed and 49 per cent believe the state pension age will be increased.
Industry split on how market hit affects drawdown customers
FTAdviser: The number of drawdown contracts sold is up 72 per cent from last year, but the global stocks slide on Monday could make guaranteed retirement income options more appealing in the future. Industry commentators are advising customers affected by the market volatility to be patient and avoid hasty actions that could crystallise short-term falls in an individual's fund.
Groups race to offload pension liabilities with insurer megadeals
FT: Advisers at consultancy PwC are warning that the upcoming Solvency II capital requirements will increase the cost of insuring pension liabilities by up to 10 per cent. Experts are predicting that companies arranging a bulk annuity deal will accelerate the process in order to complete before Solvency II comes into force in January. GlaxoSmithKline, Alliance Boots and EMI have already secured deals with insurers, which account for some of the £5bn worth of deals so far in 2015.
Private equity ‘secondaries’ evolve with Palamon deal
FT: Private equity firm Palamon Capital Partners has contributed to the sector's developing secondary market by streamlining the sale of stakes in its funds. Backers of two of Palamon’s funds were able to sell their stakes a single transaction. The company's five new backers include the private equity arms of Goldman Sachs and Morgan Stanley, and the Dutch pension fund PGGM. The deal signals the potential for greater liquidity in the asset class.
More than half a million will use pension to pay off mortgage
FTAdviser: Figures from specialist insurer Partnership suggest more than half a million people plan to use their pension pots or tax-free cash to pay off their mortgages. This is a fall from 2014, when more than 1m intended to use retirement savings for this purpose. The survey also found that 561,000 people intend to use an inheritance and 491,000 do not know how they will pay off their mortgages.
Most read stories this week…
SPP: Tax does have to be taxing
Black Monday underscores need for robust strategies
Between two boards: Balancing the dual role of exec and trustee
Run affordable risk, say experts
Is the medically underwritten annuity market too good to be true?