By HUMPHREY MKWEBU | Managing Director, Old Mutual Corporate
The research examined various decisions members must make, including the option to annuitise.
Retirees who chose annuities referenced financial stability, peace of mind, long-term financial security and less need to actively manage investments as reasons for doing so. Living annuities were valued for offering investment growth potential, flexibility, and greater control over income and investments.
Conversely, members who chose not to purchase an annuity cited pressing financial needs, a desire for flexibility and control, limited understanding of annuities, and concerns about providers as some of their reasons.
Annuity holders did have some concerns, particularly around: whether their income would last throughout retirement understanding the difference between life and living annuities drawdown rates and long-term sustainability.
Among Old Mutual members, 41% selected a living annuity, 36% a life annuity and 23% a hybrid solution. There is no single answer that meets everyones needs. Retirees want dependable monthly income, but many also want flexibility and the ability to leave something behind for beneficiaries.
The different choices reflect the balance people are making between security and control. For employers, the role is not simply to give employees a list of options. It is to help them understand those choices and their implications – particularly how long their retirement income needs to last.
The research highlights this. While around two-thirds of members felt their monthly income was sufficient in their first year of retirement, only 33% of Old Mutual members were highly confident that their income would last as long as they needed it to. It is also important to consider that retirement income may need to support more than one person.
Some 71% of Old Mutual members support at least two dependants, which has implications for both how much people need to save and the income they will need in retirement.
The research showed a clear difference in advice exposure between members who annuitised (85% received advice) and those who took cash (59% had advice). People who took cash sometimes indicated lower understanding of their retirement options, with some struggling to understand the long-term implications of taking a lump sum and managing the money over time.
It also highlights a strong appetite for support that is personalised, practical, easy to understand and relevant to individual circumstances. When asked about the challenges theyve faced post-retirement, 15% of retirees said unexpected costs and emergencies, and 14% said healthcare costs.
A further 7% regretted retiring too soon, 5% said they were bored and 2% mentioned loneliness and social isolation. People dont just need financial assistance; they need emotional support as well. In response to what their employer, insurer or retirement benefits counsellor could have done differently to help them prepare, 57% identified areas like personalised advice and better-suited products that could have been helpful.
Given this, here are five ways employers can help their people on the decision-making journey:
Start the conversation earlier: Retirement planning should not begin only when someone is approaching retirement. Introduce education earlier in employees careers, giving them time to understand how much they need to save and the choices they will eventually face.
Keep retirement on the agenda: One-off communication is unlikely to be enough. Repeated, timely engagement can build understanding over time, with more focused conversations as retirement approaches.
Make advice personal and accessible: Members want more than information. They value practical, personalised guidance that reflects their circumstances. Employers can make advice easier to access before important decisions need to be made.
Help members understand their choices: Employees need to understand not just what options are available, but what each could mean for their retirement – including life versus living annuities, investment options, tax and long-term income planning.
Focus on decisions, not just information:
The goal is to help members answer the questions they actually face: how much to save, how to invest, which retirement-income option may suit them and how to make their money last. As employers, this is ultimately about helping our people navigate one of the most important decisions of their lives.
The aim is to make sure they have the understanding, advice and support to understand what each decision means for their long-term financial security.
