The Pensions Institute report has painted a bleak picture of a pensions industry with reforms and rapid market changes conspiring to reduce choice for consumers.
Pensions Freedoms allow those over 55 to withdraw funds but there has been a dearth of new products that offer flexibility and guaranteed income.
The industry is also struggling to adapt to regulatory and technological change, according to the Pensions Institute report at Cass Business School.
The research paper is entitled: ‘The Meaning of Life 2: The UK life company business model in the context of dramatic changes to the political landscape and the investment and private-sector pensions market.
The report updates the findings of the Pensions Institute’s November 2015 investigation into the UK’s life company business model.
Outlining the challenges, report author Pádraig Floyd said: “There are conflicting policy signals coming, on the one hand, from the encouragement to save for retirement via auto-enrolment and on the other, from the freedom to withdraw funds from age 55, with no obligation to secure a life-long income.
“As the report details, in a few years’ time there is the real prospect that there could be no private-sector providers of longevity risk cover. This will result in the state having to bail out those who outlive their pension assets and could severely damage future intergenerational solidarity.”
Clive Bannister, chief executive of the Phoenix Group, the sponsor of the report, said: “The intervening years between the two Meaning of Life reports has seen unprecedented change both within the life industry and in wider society.
“These dynamics are set to have a profound effect upon the shape of the market. It is vital the industry works with policymakers to ensure the best possible outcomes for consumer protection and the sector’s own future.”
The report’s key findings include:
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