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The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevi...
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevi...
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevi...
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevi...
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevi...
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevi...
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevi...
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevi...
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevi...
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevi...
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevi...
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevi...
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevi...
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Sos2020 Finance launch presentation

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Ben Franklin, Senior Research Fellow at ILC-UK

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Sos2020 Finance launch presentation

  1. 1. The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. Here today, gone tomorrow: How today’s retirement choices could affect financial resilience over the long term Ben Franklin, Senior Research Fellow, International Longevity Centre @ilcuk @bjafranklin
  2. 2. The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. What is this report all about? In response to concerns about new freedoms. Quantifies potential scale of consumer harm for those about to retire over next 30 years. Identifies most “at risk” consumer segments. Suggests key considerations for different types of consumers. Makes recommendations to increase consumer safeguards.
  3. 3. The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. How do we get there: defining those about to retire with DC pots in England
  4. 4. The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. The different consumer segments with DC wealth
  5. 5. The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. The different consumer segments with DC wealth
  6. 6. The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. …created four stylised scenarios regarding choices in the new world 1. Annuitise 2. Blow the pot 3. Put everything in a low interest savings account 4. Keep the fund invested (income drawdown)
  7. 7. The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. Modelled the impact of different choices on retirees’ finances throughout retirement  Total income per annum in retirement based on: – Their defined benefit entitlement. – Their state pension entitlement. – The stylised choices individuals make regarding their DC wealth.  For simplicity we excluded additional pensioner benefits, taxation and liquid savings from our income calculations.
  8. 8. The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. What did we find? Indicative replacement rates for different consumer segments
  9. 9. The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. In focus: the shape of retirement income implied through savings account scenario
  10. 10. The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. The shape of retirement income implied through income drawdown
  11. 11. The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change.  Different consumers will need to take different approaches to their retirement.  Those with high concentration of DC (some 850,000 people) most at risk if they blow DC savings. For these individuals, annuitising at least part of their DC wealth makes sense.  Those with DB savings are least at risk – even if they blow their DC savings they can still fall back on their DB pots (450,000 people).  But there are many who will still have low incomes even if they annuitise due to low levels of DC savings and no DB wealth (685,000 people). Care needed to avoid these individuals falling to scams and some may need to work for longer to reduce projected shortfall. Considerations for different consumer segments
  12. 12. The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. Recommendations  New default strategy must include annuities for those with high concentration of DC wealth.  Rebranding annuities as as guaranteed income for life.  Guidance must be available to people well in advance of leaving the workforce and must be promoted through multiple channels including employer.  Pension Commission needed to raise levels of long term savings for future generations.
  13. 13. The International Longevity Centre-UK is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. Many thanks Ben Franklin Senior Research Fellow International Longevity Centre - UK benfranklin@ilcuk.org.uk 02073400440 Twitter: @ilcuk @bjafranklin

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