Just Retirement – Strictly Confidential
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Just Retirement
Holistic planning for Baby-Boomers
Plan Today, Profit Tomorrow
For Intermediary Use Only
Just Retirement – Strictly Confidential
Agenda
The baby-boom generation
The changing nature of retirement
Pensioner assets and incomes
Holistic Retirement Advice
Annuity information
Equity Release
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Just Retirement – Strictly Confidential
Ageing in the UK population
Source: ONS, 2008 3
Just Retirement – Strictly Confidential
Demos: The New Old
Baby boomers at forefront of radical social, economic and political change
within the family,
within the education system,
within the labour market,
and beyond.
Dramatic impact in later life.
Retirement could become a very liberating space
Self-employment among older people has increased significantly in the last two decades.
5 per cent in 1978
12 per cent in 1999.
50.5% would ‘rather be a self-employed entrepreneur’
4Source: Demos:The New Old, 2003
Just Retirement – Strictly Confidential
Baby boomers
Insurgent
Liberal
Individualist / non-conformist
Counter-culture
Less deferential
Less trusting of those in authority
More hostile to organised religion
More control
Consumption
More comfortable with debt
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Just Retirement – Strictly Confidential
Retirement assets becoming more complex
Demise of guaranteed predictable pensions
Increase of multiple DC schemes
Increase of non pension assets in place of some pensions savings
Main residence / Second or more properties
Shares and collective investments
Investment bonds
Deposits and related bank savings
National Savings
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Just Retirement – Strictly Confidential
Risks increasing and complex
Longevity
Asset allocation and market volatility
Inflation
Morbidity – costs and impacts
Care
Inheritance matters
Advice at- and in-retirement in short supply
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Just Retirement – Strictly Confidential 8
1979 1983 1987 1991 1995 2000 2004 2005 2006 20070
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2
3
4
5
6
7
Defined Benefit Schemes Defined Contribution Schemes
Nu
mb
ers
(m
illio
ns)
Membership of DB and DC Pension Schemes
Years
Nature of pension provision is changing …
Source: GAD/ONS 1979-2007
Just Retirement – Strictly Confidential
All units Recently retired units
Couples Couples over 75
Single pensioners
Over-75 single Male Female0
100
200
300
400
500
600
Benefit Personal Pension OPSInvestment Earnings Other
Wee
kly
gro
ss i
nco
me
£
Breakdown of pensioner incomes
Pensioner incomes vary widely
Source: Pensioners Income Series, DWP 2006-2007 9
Just Retirement – Strictly Confidential
Annuity sales by premium - 2008
<£10,000 <£20,000 <£30,000 <£50,000 <£100,000 <£150,000 <£250,000 <£500,000 £500,000+0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
88% below £50,000
96% below £100,000
Fund Size
Nu
mb
er o
f C
on
trac
ts
Source: ABI, Q4 2008 10
Just Retirement – Strictly Confidential11
3 Primary Needs
1. Accumulate effectively
2. Protect efficiently
3. Decumulate effectively
Net
Ave
rag
e P
erso
nal
Wea
lth
Retirement
Asset Accumulation
Asset Decumulation
Protection
30’s 40’s 50’s 60’s 70’s 80’s
Just Retirement – Strictly Confidential
Retirement advice is a very broad field
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Longevity protection
Liquidity flexibility
Asset protection
Long-term care
Comprehensive advice
Affinity and services
“Help me to understand and address my financial risks in retirement”
Just Retirement – Strictly Confidential
Possible retirement advice business
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Investment platform
Wealth Management
Thru-retirement Planning
Tax
Estate planning
Ages 55 and aboveAssets (excl. property) £100k to £1m
Risk profiling
Asset Allocation
Fund Selection
PortfolioManagement
Divorce
Portal / assistedpurchase
Outsourced or referred
Just Retirement – Strictly Confidential
General Advice Business
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RelationshipsSales
Co-ordinationGeneral Advice
250-500 clients per adviser
Low Cost Delivery Outsourced / Referred
Just Retirement – Strictly Confidential
Consumers need more information
Many don’t understand they have to annuitise
Unaware of shopping around and OMO
10% could describe annuity accurately
Annuity features and choices not understood
Security and guarantees a priority
Decisions won’t be made quickly
Many would use web to research, plan and decide
Need validation
Help to understand options is poor
Need to understand impact of choices as they make them
15Source: Just Retirement, 2008
Just Retirement – Strictly Confidential
Opportunity to work together
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Recent and continuing activities by the FSA put annuity
provision under the TCF spotlight
Many advisers and providers will be reviewing where this fits
into their strategy
Many will have issues with the ongoing provision of annuity
advice including
TCF and Regulatory Risks
Profitability
Longevity risks
Investment management
Administration
There is a range of solutions available to advisers.
Just Retirement – Strictly Confidential 17
How are People Using Equity Release?
Clearing Debt - loans, credit cards & mortgages
Increase income, augment pension, meet standard of living requirements
Gifting - pay for grandchildren education, help them get on property ladder
Home Improvement - repairs, maintenance, extension
Leisure & holiday - new car, cruise etc.
Home buying - for new home or second home
Source: JRS use of borrowing, 2009
Just Retirement – Strictly Confidential
Equity Release – The Opportunity
Growing retirement sector
Increasing need for improved financial management in retirement,
Equity release allows customers to realise the value of their property for a better retirement
Opportunity for companies with right proposition to offer equity release
Provide an increasingly important added value service
High level of interest and people researching
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Just Retirement – Strictly Confidential
Equity Release – The Opportunity
Number of ways to introduce equity release into portfolio of products
Qualification
ER1 counts towards Diploma at certificate levelNatural extension for mortgage qualification
Equity release isn’t only about major purchases
Help pay for other key services i.e.
domiciliary care, private medical insurance premiums, debt refinancing, monthly income
It can change lives
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Just Retirement – Strictly Confidential20
Summary
Growing segment
Growing risk and confusion
Variety of emerging needs and circumstances
Variety of potential business models
Opportunity