Leading mutual sees boost in sales over last 12 months
MGM Advantage, one of the UK's leading mutual societies, has seen a 14% increase in sales over the last 12 months driven by the launch of the new and innovative Flexible Income Annuity and the continued success of the Enhanced Annuity.
However, looking ahead the mutual society says that one of the biggest challenges it faces is that there remains a ‘knowledge gap' among many consumers when it comes to preparing for their financial needs in retirement. MGM Advantage says that the financial services industry needs to continue educating consumers, particularly about the Open Market Option (OMO) and to develop innovative and flexible products to provide income in retirement.
Chris Evans, Chief Executive of MGM Advantage, said, "Although there is now greater consumer understanding of the importance of planning and saving for retirement, many people are failing to shop around when their pension matures to ensure the best possible income once they have retired. This is even more important now in an inflationary environment when household income is being heavily eroded and with a widening retirement income gap.
"We are seeing more interest in alternative retirement income solutions that can provide some protection against inflation and potentially grow their income. For instance, demand for our award-winning Flexible Income Annuity, which offers the potential for investment growth as a natural hedge against the rising cost of living, is high as more people recognise the need to mitigate against the impact of both rising inflation and falling annuity rates."
Recent analysis by MGM Advantage reveals that collectively UK households need to find an extra £35 billion to maintain the standard of living enjoyed just 12 months ago. For households where the main occupants are aged 65 - 74, the corresponding figure is £2.8 billion and where they are aged 75 and over, it is £2.19 billion. It warns that to maintain the same living standards as a year ago, the UK population (61,792,000) would need to spend an estimated additional £571.85 per person.
Over the last 12 months MGM Advantage has enjoyed great success in a number of key areas:
Strengthening of the senior management team by appointing Justine Randall as Head of Partnerships and Andrew Tully as Retirement Income Technical Manager
The appointment of seven new Business Development Managers from Living Time
New partnership with major IFA Openwork, adding the Flexible Income Annuity to their new panel of annuities
Chris Evans continues, "Over the last 12 months we have led the charge in enhancing the range of products and services available for people reaching retirement. We are very proud to have received very early confirmation from the FSA that our new product strategy met their newly articulated requirements for the treatment of with-profits policy holders' interests within Mutual Societies. We have also signed a distribution deal with the Openwork network and are currently completing agreements with two other major networks. We have ambitious plans for the next 12 months."
MGM Advantage estimates that over the next five to ten years, £135 billion of pension funds will mature and that a new breed of annuity products such as the Flexible Income Annuity, are needed to ensure that this money provides a better income to people throughout their retirement.