The two firms have entered a ‘strategic partnership’ to create the new adviser targeted offering. The fund is designed to address what they see as the increasing need for product innovation in retirement solutions.

The fund will be available exclusively through the Fidelity Adviser Solutions platform. It is designed to help grow pension investments while providing some reassurance from the ‘daily uncertainty of investing.’

Standard Life will provide the fund structure, smoothing, valuation, supporting capital and will manage the strategic asset allocation. The underlying assets will be managed by Fidelity’s asset management business.

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There will be a ‘pilot’ to a small group of advisers in March, ahead of a full launch later this year. The ongoing charge will be 0.8%.

Claire Altman, managing director for individual retirement at Standard Life, said: “One of the biggest issues we currently face as an industry is ensuring good outcomes for people at retirement, which is at the very heart of the need for innovation. There is a lack of choice, especially for people looking for solutions to help manage daily stock market volatility when it comes to their retirement savings – a risk many planning for or already in retirement may feel unable to take.

“We are excited to be partnering with Fidelity International. By combining the pensions and long-term savings expertise of Standard Life, with the asset management, distribution and platform expertise of Fidelity, we hope to play a significant role in overcoming the challenges that currently exist within the retirement income space, by broadening access to these types of solutions, in a way that supports advisers’ processes and ways of working.”

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Dennis Pellerito, head of UK wholesale at Fidelity International, added: “With the UK’s population living longer than ever before, there is a clear demand for a range of financial solutions which cater to the different needs of an ageing society.

“As people spend longer in retirement, they require products and services which offer flexibility and can be tailored to their goals at any stage. The financial services industry – and in particular the advice sector – has a significant role to play in supporting these goals.”

Just over a third (34%) of respondents did not hold a strong view either way and 39% said they were opposed to the changes.

Currently, if a pension owner dies before the age of 75, the pension passes tax free to their nominated beneficiaries or is taxed at the beneficiaries’ marginal rate, if the pension owner is over 75.

Under the proposals, nominated beneficiaries would either have to receive the pension as a lump sum outside a pension wrapper or as an income, taxable at their marginal rate.

Impact on client plans

Among the advisers not in favour of the proposals, 82% said that clients’ financial plans have been put in place based on assumptions about current death benefits; 74% said that pension changes undermine faith in the savings system; and 69% expressed the view that the current death benefits are designed to provide a level of protection for nominated beneficiaries.

Some 50% said that the changes would incentivise pension-holders to take their tax-free cash lump sum earlier than they might otherwise have done and over a quarter (28%) cited the potential level of administration required as a reason to oppose the change.

Of those who do support the proposed change, 60% said that it would help harmonise the tax treatment applied depending on the age at which the plan holder dies. A third (33%) of these advisers believed it would encourage savers to view their pension as a source of income rather than an asset to pass to loved ones.

Almost all IFAs (92%) reported that the proposed changes would have an impact on the financial plans they have in place for clients. Some 43% claimed that it would impact a significant number of their clients. Only 8% said that there would be no impact on their clients’ financial plans.

‘Risk of customer detriment’

Chris Hudson, retail advised managing director at Standard Life, said: “There have already been several unexpected changes to pension rules in the last year, creating upheaval for advisers as clients sought advice on what this meant for their finances and financial planning. It’s therefore no surprise that many advisers do not support further changes to pension death benefits tax rules too, especially as this would affect many of their clients’ plans.

“If this proposal were adopted it would cause significant upheaval across the pensions industry. Without proper planning there’s a risk of customer detriment. This is in addition to the speculation that measures around the scrapping of the lifetime allowance could be reversed if the current government were to lose power, which would likely cause further confusion and uncertainty.

“The majority (73%) of advisers believe any further changes to pensions should now be postponed until after the next general election, which would at least provide some stability for the time being.”

Available on the open market to both new and existing Standard Life customers, the annuity is aimed at customers aged between 55 and 75 who are looking for a guaranteed income for life from their pension savings.

It is available through both advised and non-advised channels, including industry quote-comparison portals and leading specialist annuity brokers.

Claire Altman, managing director for individual retirement at Standard Life, said: “Annuities are increasingly better value. In an uncertain economic climate, the guaranteed income offered by an annuity is likely to be an ideal solution for many.”

Options

The annuity includes inflation-linked options and value protection, which provides a death benefit, ensuring the customer’s investment is returned to their beneficiary, less any income taken.

Customers can also consider the option of buying a guaranteed period for up to 30 years, which secures a regular income for a customer’s beneficiaries or dependents.

Altman added: “When purchasing an annuity, it is important to be aware that they come with many different options, or benefits, which can be used to shape the income received. It is worth considering whether benefits such as value protection or a guaranteed period would provide further peace of mind.

“Through enhanced annuities, the income received is also increased as a result of any medical conditions, so it pays to provide a full health disclosure when looking at the best options available on the market.

“Retirement income doesn’t have to be a binary choice between drawdown and annuities. By purchasing an annuity in combination with other solutions, such as drawdown, people can enjoy the best of both worlds. Purchasing later in retirement, or in stages, also allows someone to benefit from the way that annuity rates generally improve with age.”

Amid the cost of living crisis advisers are seeing significant changes in their clients’ behaviours with 35% reporting they have seen clients deviating from previously set plans by withdrawing money.

Even those who may not be immediately struggling have reassessed their approach with over a third of advisers noticing clients take out money for a ‘rainy day fund’ incase of unforeseen emergencies and financial shocks.

Economic uncertainty has also influenced investment decisions as 29% advisers said clients are choosing to shift their investments towards lower-risk options to mitigate potential market volatility.

Retail advised managing director at Standard Life Chris Hudson, said: “There’s a lot to contend with from sky high mortgages, rising interest on debts and ever changes tax rules and it’s important to factor all of this into financial planning.

“In this increasingly complex environment, financial advisers have a crucial role to play in navigating their clients through it all and helping them withstand the turbulence as best possible. This will give peace of mind to clients, as well as hopefully help them weather the financial storm.”

Matt Ward, communications director at AKG, added: “What has been experienced needs to be acknowledged and understood by the financial services industry so that a positive future can be built upon from here.

“And whilst not all of this will make such positive reading it should help to plot a path through vulnerable customer and Consumer Duty development strategies, as well as enabling advisers to prove how helpful they can be.”

The survey of 50 pension trustees managing DB schemes found that 50% anticipate their scheme will approach an insurer about a buy-in or buy-out in the next five years.

With 36% anticipating approaching an insurer within the next year.

Some 92% of trustees reported that the economic environment of the last year has improved their scheme funding level, with DB schemes benefitting from a rise in gilt yields, high inflation rates and slowing longevity improvements.

Additionally, 95% indicated that pricing was an important factor that determines whether they choose buy-in or buy-out as their ‘endgame’ strategy.

Managing director of defined benefit solutions and reinsurance at Standard Life Kunal Sood, said: “Bulk purchase annuity (BPA) deals have long been considered the gold standard when it comes to derisking, but sufficient funding is a key factor and for many pension schemes, a BPA deal was not in their short-term horizon, even just a year ago.

“However, driven in part by the increase in gilt yields and inflation rates, scheme funding levels have improved to the point where BPA deals are now a near-term solution for many DB schemes.”

“Trustees have many factors to consider when it comes to their derisking strategy; however, with many schemes in a strong funding position, it is unlikely that the current appetite for buy-ins and buy-out will slow down.”