Retirement savers want to take pension income by 65
Almost 7 out of 10 retirement savers want to start taking an income on their pension fund by the age of 65, with a quarter hoping to cash in on retirement savings by age 60, research for MetLife Europe Limited (MetLife) shows.
The nationwide study shows that just 3% of savers are willing to wait until they are past 70, with just 1% willing to wait until they are over 75 before taking an income. Around 27% would like to start drawing an income from their retirement savings between the ages of 65 and 70.
The survey also shows that being protected against the effects of inflation is seen as the most important factor when taking an income from pension savings, with half of savers choosing keeping pace with rising prices ahead of their income being guaranteed to last a lifetime.
MetLife conducted the research as part of its response to the Treasury’s consultation on the scrapping of compulsory annuitisation at age 75 – a move it wholeheartedly supports as part of a drive to make the choices available to savers at retirement more flexible and simple.
MetLife has also called for tax incentives for retirement savers who use pension products which include an income for life guarantee, suggesting that unused funds within such products should be taxed at 35% upon death , compared with a rate of 55% for those who do not use such products.
Dominic Grinstead, Managing Director at MetLife’s UK Branch said: “The overwhelming majority of retirement savers would like to start drawing on their pension fund by 65 although a substantial minority are happy to wait until they are past their 65th birthday.
“Protection against inflation is the key for half of all savers with just 10% choosing maximum income at the outset as their main concern. The key to helping people make the right choices at retirement is to keep the options open to them as simple as possible.”
“There is a major role for alternative products to standard annuities. The industry and the Treasury need to look at encouraging other options. These could potentially include longevity insurance.”
MetLife believes guarantees on capital and income could have a key role to play in encouraging retirement saving as well as potentially producing stronger returns.
It pioneered unit-linked guarantees with its award-winning Retirement Portfolio and offers income, deferred income and capital guarantees plus guaranteed death benefits across its product range, with the option to lock-in up to 10% growth annually or unlimited growth every 2 ½ years.
MetLife is an affiliate of US-based MetLife, Inc. a leading global insurance and financial services organisation which counts the U.S.’s largest life insurer among its subsidiaries. The organisation is renowned for its stability, financial strength and security, and had over approximately £384.4billion (US$ 617.3 billion) of total assets as of September 30, 2010.