bankhall conference 2009 - just retirement

Just Retirement – Strictly Confidential

1

Just Retirement

Holistic planning for Baby-Boomers

Plan Today, Profit Tomorrow

For Intermediary Use Only


Agenda

The baby-boom generation

The changing nature of retirement

Pensioner assets and incomes

Holistic Retirement Advice

Annuity information

Equity Release

2


Ageing in the UK population

Source: ONS, 2008 3


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

http://images.google.co.uk/imgres?imgurl=http://www.environmentaltalk.com/wp-content/uploads/hippies.jpg&imgrefurl=http://www.environmentaltalk.com/2007/07/&usg=__yz0FdPPyb0i-y2rnsl49yOdFVi0=&h=432&w=433&sz=68&hl=en&start=4&tbnid=e2DPH0TNYduQaM:&tbnh=126&tbnw=126&prev=/images?q=hippies&hl=en

http://redhatrob.files.wordpress.com/2007/09/vietnam_protest_rs.jpg


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

5

http://images.google.co.uk/imgres?imgurl=http://www.nndb.com/people/067/000023995/germaine-greer-1.jpg&imgrefurl=http://www.nndb.com/people/067/000023995/&h=288&w=245&sz=26&hl=en&start=0&um=1&tbnid=8DP-iSVGFoo-dM:&tbnh=115&tbnw=98&prev=/images?q=germaine+greer&svnum=10&um=1&hl=en

http://images.google.co.uk/imgres?imgurl=http://msnbcmedia1.msn.com/j/msnbc/Components/Photos/051102/051102_branson_vmed_2p.widec.jpg&imgrefurl=http://www.msnbc.msn.com/id/9901178/&h=388&w=298&sz=17&hl=en&start=7&sig2=K8FlIwnc2jNaQXNuwaTZTA&um=1&tbnid=CUhlo5H5P8nB2M:&tbnh=123&tbnw=94&ei=VrnfRpXUOqiewAG47KnjAg&prev=/images?q=richard+branson&svnum=10&um=1&hl=en&sa=N

http://images.google.co.uk/imgres?imgurl=http://timesonline.typepad.com/photos/uncategorized/2008/02/21/mick_jagger3_2.jpg&imgrefurl=http://timesonline.typepad.com/comment/2008/02/come-on-sir-mic.html&usg=__tOl6MxHZL2o2PpdWPhyQDhyZt7w=&h=1094&w=800&sz=271&hl=en&start=4&um=1&tbnid=WZwUQSqDtw7RUM:&tbnh=150&tbnw=110&prev=/images?q=mick+jagger&imgsz=xxlarge&hl=en&sa=N&um=1

http://images.google.co.uk/imgres?imgurl=http://gozonews.com/media/1/20061003-BillyConnolly.jpg&imgrefurl=http://gozonews.com/item/billy-connolly-to-make-gozo-his-home/&usg=__xlRUJHnqGwkHBHEjsJ_ioJgzv8c=&h=400&w=312&sz=38&hl=en&start=11&um=1&tbnid=JKfQiMzXA-s6EM:&tbnh=124&tbnw=97&prev=/images?q=billy+conolly&hl=en&sa=N&um=1

http://images.google.co.uk/imgres?imgurl=http://j.bdbphotos.com/news/pictures/3L/65/8365_large.jpg&imgrefurl=http://www.whosdatedwho.com/news/story_view.asp?ID=8365&usg=__F3Z6gBj-6rTYogTbdgLhlxEXYU0=&h=340&w=240&sz=16&hl=en&start=17&um=1&tbnid=L_W7xXegUpKwAM:&tbnh=119&tbnw=84&prev=/images?q=joanna+lumely&hl=en&um=1


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

6


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

7

Just Retirement – Strictly Confidential 8

1979 1983 1987 1991 1995 2000 2004 2005 2006 20070

1

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


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


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


Retirement advice is a very broad field

12

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”


Possible retirement advice business

13

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


General Advice Business

14

RelationshipsSales

Co-ordinationGeneral Advice

250-500 clients per adviser

Low Cost Delivery Outsourced / Referred


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


Opportunity to work together

16

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.

http://images.google.co.uk/imgres?imgurl=http://www.esd.org.uk/esdtoolkit/image/news/humantargetweb.JPG&imgrefurl=http://www.esd.org.uk/esdtoolkit/News/News.aspx?Archive=True&allNews=True&usg=__SDM2tHwtTDy5H7KHKdKQCWcIwx4=&h=495&w=700&sz=35&hl=en&start=16&um=1&tbnid=S0GkgiaUSaOB9M:&tbnh=99&tbnw=140&prev=/images?q=strength+through+partnership&hl=en&um=1

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


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

18


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

19

Just Retirement – Strictly Confidential20

Summary

Growing segment

Growing risk and confusion

Variety of emerging needs and circumstances

Variety of potential business models

Opportunity