UK/US - The UK and US defined contribution markets are swapping attitudes towards annuitisation, industry figures say.
BlackRock director Emma Douglas (pictured) said a recent trip to the US - where there is a more mature DC market - revealed the US was becoming more focused on annuitisation at a time when the UK government is set to scrap the age 75 rule.
Douglas said US scheme members were worried about running out of money because they tended to keep their pension pot invested through retirement and are not forced to buy an annuity.
However, Douglas said US providers are developing target date fund solutions that favour a shift towards an annuity culture. And she said DC members in the US were taking advantage of early access to pensions - illustrated by an increase in requests for withdrawals and hardship loans from DC pots.
Mercer senior partner in the US Baltimore office Barbara Marder said it is a bit exaggerated to say the US is heading towards an annuity culture but a number of providers - insurance companies and asset managers - have some interesting annuity-type products for DC plans.
She said a recent Mercer survey revealed close to half (45%) of US plans were considering adding an annuity-type option or guaranteed minimum withdrawal product - whereas two months ago that number would have been a lot smaller.
Marder said: "We could start to see some incentive for workers to buy annuities or for sponsors to include some annuity option in their plan - not a requirement to buy."
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