A far cry from the value of the well established and mature death in service benefits market that attracts some 600 million in premiums to the insured market alone. With the prospect of low long term interest rates, many advisers have to communicate some difficult messages to their clients. It may come as a surprise that some protection products are significantly affected by the impact of lower interest rates. In particular, those securing income benefits. The usual financial products associated with a dependency on long term interest rates are annuities and long term savings.
Pensions are particularly hard hit.
Those retiring now are receiving lower incomes than they expected. The prospects for those saving towards retirement are doubly hit, with reduced potential returns on their savings and the expectation of a lower income at retirement. We have to decide what we want from the Welfare State. At present inappropriate benefits are being paid to those who have no need - and those in need are being inadequately targeted for benefit.