It’s a tough agenda as since the introduction of Pension Freedoms in 2015 the behaviour of savers has included cashing in the pot as well as drawing down cash, swapping from an annuity and using the pot as an insurance against inheritance tax bills. These pots are no longer associated with the things most people of an age to cash them consider pensions- what you get from the state and what you get from your employer as a defined benefit – a certain income.

The requirement to buy an annuity went with the introduction of Pension Freedoms but people still buy pensions voluntarily, there is little dissatisfaction with their annuity thought. The left hand chart shows that the level of trust with the provider (left) and satisfaction (right) are at the same levels. Satisfaction may have reduced because those who purchased in the previous decade now find they could have bought an income considerably higher (because of different economic conditions than in 2020 and 2022).

That the answers from those in drawdown are so similar between 2022 and 2024 is interesting; so are the trust and satisfaction levels relative to annuities.  The FCA is talking to a part of the market that has similar attitudes to their retirement income provider. This is a stable market.

The market for encashment is sticky with the provider (provided the provider offers decumulation). Some occupational DC providers require a transfer to somewhere else (as personal pension or annuity or bank account) to have regular access to cash.

The annuity market is now shopping around though 40% of savers still get their pension from their insured provider. It looks as if some people shopped around for annuities and ended up buying from their provider, it looks as if there has been an increase from 62 to 80% of savers drawing down from their provider without going elsewhere. Are providers getting better at meeting their customer’s drawdown needs?

It looks as if there is a hardcore of inveterate purchase researchers who change DC providers and then buy an annuity after shopping around.  It looks like that the numbers buying from the provider is reducing and people buying annuities are comparing at least 2 and 3. The numbers here are quite startling and make good reading for annuity brokers like Retirement Line (and the FCA). The FCA is in sounder shape than before, albeit only dealing with the end of the market prepared to swap flexibility for income security.

It is good to see financial advisers getting involved in choice of annuity though most of the decision making is made around annuity rate. It is likely that the more sophisticated purchasers are looking for features of the annuity that meet their needs and this does look adviser territory.

It would be interesting to have some data on the proportion of savers moved to a different drawdown providers and when this happened. Did people do this as a part of “retirement” or was this part of a financial plan that was much more sophisticated than swapping accumulation for drawdown

The reason people stay with financial services providers is trust (an often used measure of value for money  offered by Michael Jones of Eversheds on this week’s VFM podcast

The financial adviser is usually a “wealth manager”. There are commercial reason to move money to advisers, not least it is more tax efficient to pay advisory fees from the drawdown fund by way of AMC than separately

What follows  is interesting and suggests that pension providers are competing with wealth managers for drawdown business. I have taken a partial encashment (my tax free cash sum fearful I would lose the right to it).  I am aware that my provider (L&G) is interested in offering me strategies.

This part of the Financial Services Survey is of rather more interest to financial advisers than others as it deals with that portion of the population who- at retirement – take informed decisions.

However it should not be taken as what the entire population of people moving towards decumulation are doing. Those in DB schemes do not have to do much more than decide a few options for their pension, those with small pots are most likely to cash out and there is a huge majority of people with DC pots they take tax free cash from, but have no clarity about what to do with the rest.

These people are those for whom a default would be helpful;-  an option that promises a pension will be paid to them from a retirement age which may be defaulted to state pension age.

This section of the 2024 Financial Lives report will be of interest in years to come. 2024 should in future years be of interest, as 2014 was of interest, as the last year of a previous regime.

The Telegraph’s budged cartoon in 2014