Decumulation: it requires a different approach

Retirement income is at the forefront of the FCA’s attention

The FCA’s current focus on retirement strategies is a welcome reminder that retirement is a watershed moment.

Life doesn’t stop still just because one is no longer working, so ongoing support and flexibility remain crucial. This is especially true for someone in retirement who may no longer have access to other income sources and can’t rely on changing jobs or receiving pay rises to boost their income.

This timely report paints a very clear picture of an industry with several quite distinct approaches to meeting these challenges.

What does the report cover?

Drawing on Alpha FMC’s independent research, this report explores various retirement strategies, including systematic withdrawals, annuities, and tax-efficient approaches. The research identified several key themes:

• Regulation
  It is more important than ever for firms to evidence why their retirement proposition and income strategies meet the needs of target markets and individual clients.
• Opportunity
  The transition from DB to DC pensions, demographic trends, and economic pressures will accelerate the growth in demand for more support and engagement through retirement.
• Transition
  Decumulation requires a fundamentally different approach to the accumulation phase.
• Approaches and strategies
  There are multiple options for advisers to consider when advising their clients in decumulation with firms following very different approaches.
• Centralised retirement propositions
  Balancing flexibility with consistency is proving a challenge. How do advisers create robust centralised retirement propositions that support all clients’ needs?

Providing actionable insights

Decumulation is not merely the opposite of accumulation; it requires a nuanced understanding of market dynamics, regulation, risk management, and personal financial goals. 

In an era where longevity and retirement planning are paramount, the strategies outlined in this report will equip you with the tools necessary to optimise your clients’ retirement income strategies while striving to protect and enhance their financial security.