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Northern Trust and CREATE-Research: Pensions Reform in UK Won’t Permanently Displace Annuities

Research Reveals Five Key Areas of Change Following Elimination of Compulsory Annuities

(Business Wire Northern Trust (Nasdaq: NTRS) and independent global forecasting centre, CREATE-Research, anticipate the abolition of compulsory annuitisation in the UK will ultimately result in a greater diversity of products while not displacing annuities altogether.

The forecast is based on data gathered in CREATE-Research’s annual surveys over the past two years, involving around 100 asset managers and insurance companies in the UK on the topic of the evolving pensions landscape in the UK.

The research revealed five key areas of change likely to result from the elimination of mandatory annuitisation in the UK:

1. Diversified income funds are likely to emerge as the immediate beneficiaries

2. As the impact of fees on retirement plan balances becomes a greater focus, exchange traded funds are likely to benefit

3. The influx of money from defined benefit plan participants migrating to defined contribution funds will encourage the development of new funds

4. The competitive dynamics between insurance companies and asset managers are expected to shift as insurers evolve to offer blended offerings, mixing annuities with healthcare, life insurance and disability benefits

5. Advisors’ roles are likely to shift with customized advice available to those with higher savings, with embedded advice common for lower-balance funds

“These changes are the most ambitious in living memory and represent a major transformation of the UK pension market,” said Amin Rajan, CEO, Create-Research. “Investors will, as a result of the changes have greater choices in retirement planning, selecting annuities, savings or other investments, but also greater individual risk, raising fresh concerns around the quality of advice and levels of financial literacy across the country.”

“The reform of the UK pensions market is likely to radically alter the retirement industry as a whole,” said Penelope Biggs, head of the Institutional Investor Group for Europe, Middle East and Africa, at Northern Trust. “This will result in true innovation and a greater diversity of products from institutions, and more choice for individuals – the impact will be felt across almost the entire population of the UK.”

“At Northern Trust, we understand the changing requirements of our clients. Increasingly, this includes consultative and innovative DC solutions,” Biggs said “Coupled with our experience in de-risking support, investment outsourcing, and risk and analytical services, more and more clients are turning to us for a holistic suite of investment solutions.”

Northern Trust offers an extensive range of services to more than 150 UK pension schemes, including 37 percent of the total local government pension scheme market and 31 percent of the top 100 UK funds.

For a full copy of the research report, visit


About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of asset servicing, fund administration, asset management, fiduciary, and banking solutions for corporations, institutions, families, and individuals worldwide. Chicago-based Northern Trust has offices in 19 states, Washington, D.C., and 20 international locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of September 30, 2014, Northern Trust had assets under custody of US$5.9 trillion, and assets under investment management of US$923.3 billion. For 125 years, Northern Trust has earned distinction as an industry leader in combining exceptional service and expertise with innovative products and technology. For more information, visit and follow us on Twitter @NorthernTrust.

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at