The AAE has carried out a survey amongst its Member Associations on the methods by which an individual can access his/her entitlement to retirement benefits. 16 AAE member organisations contributed to the survey.
The survey serves two purposes. One being to inform the European Commission’s Directorate General for Employment, Social Affairs and Inclusion about the decumulation landscape in the EU and the other being to provide a directional steer on best practice and main common challenges within the various markets for retirement benefits.
The survey provides factual information on the different decumulation systems in the European Union including the current gaps in these systems. It also provides guidance on what a best practice decumulation system might look like.
Member organisations were asked what individual needs are not met under the current arrangements. The key common theses within the feedback were:
1. Insufficient funds accumulated – due to lack of consumer understanding on the need and lack of tax incentives
2. Lack of products that offer more flexibility than annuities but provide investment and longevity guarantees (e.g. deferred and variable annuities, income drawdown with guarantees)
3. Lack of information and advice on decumulation issues and risks that consumers need to consider
4. Lack of products that address extreme or special life circumstances
5. Lack of guidance or advice to consumers on which products best meet their needs and how to decumulate based on their own individual circumstances
The survey shows that more work needs to be done on product development to support individual decumulation requirements and on providing information and advice on these possibilities.
Based on the outcome of this survey, the AAE believes there is a market for different solutions for different needs. These solutions should be supported by an adequate regulations framework and
- more in general - by tax incentives to encourage and reward individuals for saving for retirement.
The survey is available here