What the Pension Reform Means for Advisers

Five months on from George Osborne's Budget speech, financial advisers are beginning to understand what scrapping compulsory annuities will mean for their industry

J.P. Morgan Asset Management 14 August, 2014 | 11:01AM

This article is part of Morningstar's "Perspectives" series, written by third-party contributors. Here, Jasper Berens, head of UK Funds at J.P. Morgan Asset Management discusses the impact of pension reforms on the financial advice industry. 

UK advisers are going to have to step up to much more comprehensively advise clients on how they take their capital and income from maturing pension pots and furthermore how this works in the context of using their other accrued savings pots or their property to support their changing lifestyles, situations and requirements during retirement. The announced retirement freedoms may create as much as £9 billion market flow in 2015, equivalent to an approximately 40% increase in UK open ended net flows.

That scale of change is going to have enormous impact on how advisers conduct business. Given that more than 91% of current drawdown assets are currently adviser intermediated, IFAs are right at the heart of this. Early consumer surveys suggest that roughly 32% of defined contribution assets will be money-in-motion, either entering drawdown wrappers, ISAs or going into annuities which are not overseen by the pension scheme or trustees. 

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About Author

J.P. Morgan Asset Management  is the investment arm of JPMorgan Chase & Co. and it is one of the largest active asset managers in the world.

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