Lessons from the crisis

Helen Morrissey asks a panel of experts to consider the impact of the present economic turbulence on the plans of those who are just about to approach retirement

Helen Morrissey: How has the current economic crisis affected people's retirement plans and are we seeing any evidence that people are having to delay their retirement as a result of their pensions having lost money?

Bob Perkins: The fact that markets have dipped has hit everyone. Those most affected are those closest to retirement as they have important decisions to make regarding their retirement income. For those with sizeable funds there's probably less reason to panic as they are more likely to have time on their side and they are likely to be able to take advantage of more flexible options. It's those with small funds that have been hit hardest and they will struggle.

Morrissey: Do you think that the crisis has actually crystallised matters in that people now realise they can't afford to retire?

Perkins: There's a big lesson to be learned for those currently saving for retirement in that you shouldn't have all your eggs in one basket. Diversification is key.

Phil Brown: The key lesson is the real need for advice. There are so many people out there with all their money still in equities. At some point that's the right thing to do but obviously at the moment it's very much the wrong thing to do. People need to learn more about what their retirement planning involves and when is the best time to look at more secure options. There's a second point there about access to advice. People with smaller funds are finding it hard to get access to advice and that is because some advisers don't think it is economically viable to provide advice for funds so small. How can we look to facilitate business for those kinds of customers?

Mike Morrow: It's difficult. Those with the smallest funds are those least well served by the market. The point of diversification is also important. We've had a generation of people who sought to invest via property for instance. These people will seek to diversify a bit more in their pension planning which will be a positive going forward.

Vince Smith-Hughes: It's almost the worst of all worlds for those looking to draw down their funds as we are seeing annuity rates drop as well as markets having fallen significantly ... However, people are looking to retire later. We did a survey earlier this year which indicated 2.2m of people said they were looking to defer their retirement. The scary thing was that some retirees said they didn't think they would ever be able to afford to retire. We are also seeing people who want to draw income though it is not necessarily from a conventional annuity - they want to remain invested in real assets so there is some potential to grow their fund or income back as markets hopefully recover.

Morrissey: In recent years we've seen real growth in income drawdown as people want the chance to remain invested in the markets and grow their fund for longer. However, has the fall in markets put people off?

Smith-Hughes: Many of the people receiving advice are often concluding that staying in the markets is the right thing. It's often those with lower fund values who aren't receiving advice and are just going into a conventional annuity. Unfortunately it's usually these people who need help the most.

Perkins: There tends to be a preconception that annuities are dead in the water and that people should look to more flexible options. I'm not disputing that on one level but it is very much down to individual circumstances and attitude to risk. We need to be very careful when extolling the virtues of these more flexible products. The fact is that we all prepare for retirement in different ways and we purchase a variety of different savings vehicles along the way. These include ISAs, pensions, savings etc. The trick is to get something from each of them, rather than just relying on the one pension pot. If we aren't careful we will undermine the most important part of the exercise which is the commitment to long term saving.

Morrow: I certainly agree that the biggest issue in the UK is the savings gap.

Perkins: People seem to think that if they put, say, £100 a month away into a pension then it will give them an adequate income at the end. It won't.

Smith-Hughes: I think that's highlighted when you look at the swing from defined benefit to defined contribution schemes and the transfer of risk from employer to employee. Under final salary we were seeing effective employer contributions of 20% being put into employees' pensions whereas under DC you are more likely to get an employer contribution of 5%. We need to encourage people to save to cover that shortfall.

Morrow: The other point is about balance. It's been an incredibly unique set of circumstances we currently face. In an ideal world you would have diversification that would hedge one asset class against another. The drawdown market it is still tiny in comparison to annuity which is why it is a real shame to see the Hartford leave the market as they were developing some really interesting stuff.

Smith-Hughes: 75% of the money coming into the market still goes into annuities whereas the drawdown market doesn't seem to have taken a lot of this, despite the recent product development.

Brown: Does that tie back into the retiree now having to take on more risk rather than the employer? This could well deter them from entering drawdown.

Perkins: It's all about managing expectations about what clients can buy with their pension pot. It can prove a bitter pill to swallow as people still don't understand that they save 20 years into a pension and don't get the income they expect.

Morrissey: Are you seeing much evidence of people cutting back on pension contributions as a result of the current financial conditions?

Morrow: We are seeing people choosing to pay down debt rather than boost their pension contributions. However, what we are seeing is that even though people realise things aren't so good at the moment they still want to be in the market to ensure they benefit from the recovery when it comes.

Perkins: When people go into drawdown they are taking a medium to long term view anyway.

Brown: People are looking to see if there is going to be an end to current conditions soon.

Morrow: The trending we are starting to see is that people want to know more about the choices of where they put their money. We are also seeing a lot of money going down the simple fixed interest route though people are facing the dilemma of possibly missing out on the market recovery.

Morrissey: You have all mentioned the need for diversification and the need to not rely solely on pensions. Is there a sustained move towards vehicles such as ISAs?

Perkins: It depends which end of the market you are looking at. Obviously there are benefits in that there are no constraints as to how you access the cash. However, a lot of people with cash ISAs may look to re-enter the market at some point. The other trend of the market we are seeing is that we have those newly penalised people who earn £150,000 plus who will be looking to get tax relief. They may look at vehicles such as VCTs or EIS to give them the tax relief they need.

Smith-Hughes: Obviously the difficulty with ISAs is that you may set one up to save for retirement but then it is cashed in before that as they need to spend the money on something else.

Perkins: I think that one of the real positives about pensions is that you can't access that pot until you are at least 50-55.

Brown: The hardest part of it for me is having a government that continuously tweaks pension legislation so we never have a level playing field. At the top end there is no incentive to put money in nor is there at the means testing end of things. They've sliced two huge parts of the market there and I'm not sure that the government understands what they are doing.

Morrissey: I was at a conference the other day and one of the presentations highlighted that we have seen 700 new pieces of pension legislation over the past five years. That amounts to one per week. How can the industry seek to engage with people about their retirement planning in such circumstances?

Brown: If people appreciate issues such as longevity more then they are more likely to do something about it. However, we need to do something about it earlier and try to engage people in the whole process at least ten years before retirement. I'm not sure how you do it but the engagement of individuals in retirement is woefully inadequate and we need to address this. The biggest issue with literature that we provide is that it doesn't matter how clear it is - it's how interested the reader is in what it has to say - that's the real issue.

Perkins: As a rule we are dealing with a certain part of the market - those who can afford advice. The real big part of the market is the middle tier. Personal accounts will be introduced to inject some "compulsory" saving there but the fact remains we need more provision for workplace advice. You can start off with introducing financial education in schools but we need the Government to consider providing more subsidies for workplace advice.

Brown: That's what they do in the States with the 401k

Perkins: We do kind of have it already with the £150 a head of pension advice which government allows employers as a deductable expense but it needs to go further than that.

Smith-Hughes: If an adviser is able to talk to people in the workplace people have a better chance of understanding the benefit of getting a pension.

Brown: There's another dynamic there. There's a fear among employers that what they say could be construed as advice. We don't give them any tools to meet this challenge. They have legal departments telling them what they can't do but no one is telling them what they can do.

Morrow: There isn't nearly enough information given into how people invest. Is the traditional managed fund going to give you that full diversification if that is the only pot of money you are bringing into retirement?

Perkins: Managed funds are fine but what happens when it comes to retirement and you find everything is bundled together? If you are looking at going down the drawdown route then it is necessary to have everything unbundled. I think smaller savers will probably look towards the more guaranteed annuities as they work well with managed funds. Third way products though are having a hard time as maintaining the guarantees is proving expensive.

Morrow: I agree the cost of guarantees have just gone through the roof over the past 18 months. However, recent research shows people do like guarantees - we just need to find better ways of delivering them.

Brown: There's an interesting undertone here because as an industry our products are defined by the revenue rather than us and this does tend to stifle innovation. For instance in the UK it prevents you from allowing people to access their fund earlier. In the US and Australia under certain circumstances you can access your fund in times of financial hardship - that's an attractive proposition to customers. We always need to look at what the rules allow us to do but I would agree that within the rules there has been plenty of innovation.

Morrow: If we roll the clock back even three or four months we saw a lot of interest in SSAS products. Small companies were having problems accessing credit from banks and so looked to recapitalise their business by using their SSAS. It came as quite a surprise to us: we didn't expect to see that. Small businesses do what they need to survive and these conditions have actually reminded people of these extra benefits of having a SIPP or SSAS.

Perkins: There are a lot of new ideas in the market. The issue for me is that every product that comes out needs to be different to everything else, usually down to commercial pressures. This doesn't make the IFA's job any easier as it's up to them to decide which one has the best features for their client. It's interesting that we have a standard set of rules but no standardisation of the products within it.

Smith-Hughes: I think we are starting to see advisers take a more mix and match approach whereby more tailored solutions are put together for their clients by using a blend of products rather than just focusing on one. I think this makes things easier for the adviser and their clients as the retirement solution can be bespoke. The problem with variable annuities is that they are too complex - people want something they can understand.

Morrow: People need certainty on contracts and want to understand who is underwriting risks. Increasingly they want to know what is behind the guarantee. Who is the counterparty and what charges are they paying?

Perkins: One of the biggest criticisms of an annuity is that you are locked in. I'm a supporter of third way products - they have a place but what level of risk are individuals taking by being in that product? When you start looking at the guarantee charges and the investment returns you would need to fulfil the wider objectives, low to medium risk strategies simply do not work. Unless they take a medium to high degree of risk then clients could be locked into this product just as much as with an annuity.

Smith-Hughes: You are right. When we looked at this market we found that the current cost of providing such a guarantee just wouldn't make the product attractive in the market. It would be OK if you got double digit returns every year but that isn't going to happen.

Perkins: You could argue that the client is willing to pay for the guarantee but the client can get an annuity with a guarantee. They go into variable annuities in the hope of actually getting something more. What level of risk are they willing to take in order to get that?

Smith-Hughes: What's the likelihood of them getting more considering the charges?

Perkins: You are looking at more medium to high risk investors going into this product as they are the only people with the right degree of equity exposure to make it worthwhile.

Brown: It's a good point - how much risk are you willing to take. These products can make the guarantee very expensive. I think the Revenue tried to deal with this by introducing death benefits but then took it back with the tax or age limitation. If both of these issues were dealt with then we would see annuities becoming more attractive.

Perkins: People get to retirement and they could have a pension, ISAs, shares etc and they will automatically look to draw from their tax advantaged pension fund rather than other sources that aren't. People who don't get advice don't get guidance on this. They need to look at what they've got in their entirety and then work out how best to take their income.

Morrissey: If we move onto annuities. They are still the choice for the vast majority of people. How can we see the annuity market develop going forward? Vince you recently launched the Income Choice annuity - why did you choose to do it now?

Smith-Hughes: We had had our with-profits annuity since 1991 and advisers have always thought it has delivered good income to their clients. What was becoming evident though was that it wasn't as flexible or as simple as it perhaps could be. We took this on board and believe we have kept the attractive features of the existing with-profit annuity but modernised the contract. We introduced simpler guarantees, made income levels more flexible and allowed a flexible remuneration structure. It is more evolution that revolution but we are finding that those who would have ordinarily purchased an annuity are considering it, and it is also suitable in some cases for those who would otherwise consider drawdown.

Brown: The enhanced market will be a huge growth area going forward as we will also see underwriting developments. To a certain extent customers aren't getting the best deal they could. It's estimated that 40% of people could qualify for an enhancement yet at the moment only 10% of people go for one. Those who don't have access to advice aren't getting enhanced annuities. I think we need to get a more personally underwritten market. A postcode annuity is a nice step forward but doesn't help people as individuals. It doesn't help you if you have cancer or kidney failure. Advisers need to know the full picture about people's health before choosing a retirement product. However, we need to get around the issue of people not fully disclosing the nature of any health conditions they may have.

Smith-Hughes: It's probably also worth mentioning of course that asset backed annuities often can be written on enhanced terms as well. We might find that more people living in better postcodes in good health start to think that conventional annuities aren't the best value for money for them anymore. They will probably look to move more towards some kind of asset backed solution to get the best from their retirement income.

Morrow: What you have both described there is that at whatever end of the annuity market you are at you probably are in need of some innovation.

Smith-Hughes: And decent advice.

Morrow: I think what we've come to realise is that the current models are starting to look tired and this economic cycle has brought this into focus. We know a lot about the guarantee market and like the enhanced market but the current baseline annuity market does lack innovation and needs something different.

Brown: When you throw Treating Customers Fairly into the mix as well then we realise that as an industry we have no choice but to go to a fully underwritten model as anything else is unfair to the consumer.

Smith-Hughes: I'd say the same for the breadth of advice given when it comes to considering products. Advisers shouldn't just be saying drawdown or annuity. They should consider the whole range of products and see how they can be used to their best effect.

Perkins: I firmly believe you should take a wider approach and I completely agree with what you were saying with regards to an underwritten model. I think to be fair to an individual then you have to relate the product to them.

Morrow: We are back to the issue of availability of advice at different levels. We need to see more access to advice at the lower levels.

Perkins: We need to highlight the fact that annuities remain important and will do so for the vast majority of people for the foreseeable future.

Morrissey: Talking about access to advice. What role do you think Money Guidance could play in helping people understand more about their retirement options?

Perkins: I think the Money Guidance model can do a lot to help people. People are more than happy and more than capable of making the right choice if they are given decent guidance. However, there will inevitably come a point when the consumer says "what if" and that's when they need advice - that's the problem.

Smith-Hughes: I like the Money Made Clear documents issued by the FSA but they aren't that easy to find. If we could make it easier to find then it would be really helpful. They could form a source of independent guidance that I think people would find very useful.

Perkins: People will still get to a point when they read something and feel they understand it but will need further guidance. It's at this point that they can go and talk it through at Money Guidance. Again the issue is that people won't go because they may feel stupid asking what they perceive to be basic questions about their retirement options. However, the fact remains they still need to know.

Brown: People will feel daft going into Money Guidance to discuss a pension product they have held for thirty years and yet don't know what it is.

Smith-Hughes: People rely so much on the web but what happens to those who don't have access to the web?

Morrow: When you talk about wealthier end of the market they will often retain the same adviser over time but at lower levels they tend not to. The adviser becomes detached and the service becomes more transactional. There isn't the aftercare at the lower end of the market to ensure people understand what they have bought and whether it still meets their needs.

Perkins: That's one reason why we are going through the process of segmenting clients between those who want a transactional service and those who don't.

Smith-Hughes: We need to give people advice throughout retirement - not just when they retire. You need to keep in contact with them.

Brown: With an ageing population that is critical especially when it comes to long term care. Their pensions often can't cover this extra expense and so they often need to look to other assets to fund this. One in four men and one in three women will need long term care at some point in their lives.

Morrissey: That's one area that isn't touched on enough. How can people fund long term care? No-one wants to fund it in advance as they don't ever want to believe they will be in that position.

Brown: It's a hard thing to insure as you don't know what to insure for. You can insure against some aspects fairly easily but when you are looking at things like dementia then that becomes very cost prohibitive. Long term care tends to be funded by more immediate care annuities which tend to be purchased through sale of property. However, with the property market being the way it is then obviously that is more difficult now. The thing that would make the market work better is certainty. A lot of people think paying national insurance gives them cradle to grave cover but it doesn't it is cradle to retirement. Long term care never came into it. It's a difficult issue. Government needs to be crystal clear about what they cover and what they don't. If we can remove these barriers then we will be more likely to get a more effective market.

Morrow: You need to have a clear policy to cover the UK as whole. We need a more consistent approach.

Perkins: The big issue here is local authority affordability. As an adviser should you look at people's pension arrangements or IHT planning without taking long term care into account? It's a difficult subject to broach as clients don't want to think about it.

Brown: When you broach the issue with people they always think they will remain fit and strong and will be one of those who won't need long term care. However, they need to realise that increasing longevity isn't matched by increasing good health.

Morrissey: Will long term care prove to be a catalyst for the equity release market?

Brown: There's a definite correlation. It's possible one will drive the other.

Perkins: The immediate care market will still be significant as it puts a cap on what is taken from the person's assets. Most people going into long term care aren't going to die immediately. With dementia you can live a long time and that could seriously deplete your assets.

Brown: It's a critical area. If people understood they could extinguish their assets by going into long term care then it makes immediate care annuities more attractive as you know the cost upfront.

Morrissey: There's been a lot of talk in the past about the u-shaped annuity. This takes into account the higher level of income needed at the beginning of retirement when you look to do more and the end of your life when you may need more money for long term care. How can we deliver that?

Brown: At the moment pensions legislation doesn't allow us to develop such a product as an annuity but there is nothing stopping the adviser from structuring the client's assets so that it produces the same effect. They just need the time to plan ahead. It comes back to Vince's point about providing advice throughout retirement rather than just up until retirement.

Morrissey: If we just move onto the issue of tax free cash. Are there any particular trends as to how people are using it? Are people using it to its best value?

Smith-Hughes: What we are seeing is a huge number - 60% of all drawdown we do is taking TFC and nil income. This money is then used to pay off debts, pay school and university fees as well as setting up businesses. Whether this is a good or bad thing depends on the individual. The client needs to understand the implication of taking their tax free cash.

Perkins: When someone retires early, particularly if they have a small fund, then we need to get to grips with what they want the cash for. Can they use other assets rather than take the tax free cash? As advisers we have to ensure clients understand the full impact of taking that money early. This process is part and parcel of the whole advice process that all advisers should cover.

Smith-Hughes: It all comes down to making sure they have the right advice.

Brown: In the enhanced market we are seeing an increased demand in PLAs as people realise that if they have health conditions they can get double digit returns. We are also seeing more people taking their tax free cash and then asking if they can use it to buy another annuity elsewhere. I'm not sure if that is a trend that will come across the whole market though.

Morrow: One trend we described earlier is that we are seeing people taking tax free cash but continuing to work. They will use the money to either pay down debt or recycle it into another scheme. We see bits and pieces of that but not enough.

Smith-Hughes: As long as you stay within the rules then the recycling of tax free cash can be very attractive.

Perkins: However, the rules surrounding it are so complex.

Morrissey: If we move onto the issue of fixed term annuities now. Are people using them to try and keep their options open for as long as possible?

Perkins: I think people want value for money from their annuities and ten year guarantees are one way to ensure this happens.

Brown: There are two interesting aspects here. If you have a mild condition there is a chance it could get worse over time so you don't want to lock into an annuity too early if you could benefit from an enhanced annuity later on. As long as you understand the risk of annuity rates going up and down then that's fine. However, if you are already in poor health it is a very different decision as it becomes purely a case of what direction you think the annuity rates will go in and whether that will affect your retirement pot.

Smith-Hughes: They can certainly be a part of someone's portfolio of retirement contracts - a useful accompaniment to a drawdown contract or asset backed annuity.

Morrow: This is part of the wider move towards purchasing a basket of products rather than one. The flip side of it is the scheme pension route which is becoming a positive option for those with larger pension funds.

Morrissey: Can you see scheme pension becoming more mainstream?

Perkins: Yes for a particular part of the market. Certainly for family businesses - I think it will be vitally important but it won't be a solution for the lower part of the market. It enables real cohesion to the family unit in terms of retirement planning. It also enables access to a higher level of income than you would get from USP and it enables surplus money to be used for the benefit of others without the drawbacks of ASP.

Morrow: We are expecting more people to join the family SIPP market.

Morrissey: Do you see ASP having much of a use going forward?

Perkins: ASP will have a place but the problem is the government complicated it beyond belief. ASP would have been better if they hadn't messed around with the inheritance tax aspect of it.

Morrow: Scheme pension compares very favourably to ASP.

Perkins: If you can afford ASP then you can probably afford to go into scheme pension. The biggest issue with ASP is whether you will get full value for money and scheme pension answers that by giving you more than ASP. You have more control. ASP is still a good tool for IHT planning particularly for those with surplus income, who can make gifts from normal expenditure, though the same does go for scheme pension too.

Smith-Hughes: I think ASP has been hit by taxation of death benefits and the amount of income you can take. However, it continues to be of use for those with much younger spouses for instance but for the majority of people they will be put off by the restricted income. You could get more income from an asset backed annuity. You have the benefits of ASP when it comes to gifting to charity but I think its appeal will be very limited.

Brown: The taxation side of it is difficult and has made things more complex than they needed to be. I think it is a real lost opportunity.

Perkins: What adds to the complication is that if you use money in an ASP in a way that is not permitted then it is classified as an unauthorised payment. A lot of registered pension schemes undertake not to make unauthorised payments as to do so could jeopardise their registered scheme status. Even those who make them face the issue as to how to do it. Will you reallocate the fund or will you pay cash out to the beneficiary? If you pay cash out you need to make sure you have enough to cover the tax.

Morrissey: Just to finish off what do you see as being the main challenges currently facing the at retirement market and how do you feel the industry can meet these challenges?

Brown: The biggest challenge will be the sheer volume of baby boomers coming through. Are they accessing the best advice? Can the industry deal with the increased volume? For it to be fair then the underwritten market needs to come sooner rather than later to ensure people don't miss out.

Smith-Hughes: The at-retirement market is due to grow massively in the coming years and we need to ensure those people are suitably advised. Overall we need to get people to understand what they are buying. They need to appreciate what they have from their retirement vehicles and get the most from them, both in and at retirement.

Morrow: It's going to be a great time for advisers because people will need good advice and need to build strong relationships with their advisers. We will also see more innovation coming through in the family SIPP and enhanced markets as the current models are looking tired now.

Perkins: My first wish would be no more legislation. The second would be for advisers to be put in the position to offer more advice to people during the accumulation phase. I think this is best suited in a workplace environment. I would also like to see some more harmonisation in the products on offer. Sometimes I feel that product features are there to provide a competitive edge rather than actually serving customer needs. We need to stand back and ask does the customer genuinely need this feature. Both advisers and customers need products that are easy to understand.

BIOGRAPHIES

Philip Brown is head of retirement products at Partnership

Phil has been working in the life and pensions industry for over twenty years. During his career he has been head of customer services and technical administration at Teachers Provident Society and a senior policy adviser at the Financial Services Authority. In his role at the FSA, Philip was instrumental in the development and launch of the FSA Comparative Tables.

About Partnership

Partnership is one of the UK's leading providers of financial products for people with health conditions, delivering innovative financial solutions that reflect clients' personal circumstances and needs.

We cater for clients with a wide variety of health conditions, from the relatively minor such as hypertension, to the more serious such as heart failure, stroke, diabetes, kidney failure and cancer. By looking at every aspect of clients' health Partnership aims to deliver the maximum benefit.

Partnership is the longest established company offering annuities for people with health conditions and the only company operating in this arena with its own proprietary underwriting manuals and mortality data.

Mike Morrow is head of business transition and development, AXA Winterthur Wealth Management

Mike joined AXA during 2001, and has held senior roles in sales and management development, sales distribution and account management. Michael was one of just three regional directors at AXA Life and was responsible for leading sales delivery in the face to face intermediary business, achieving significant uplift in business levels year on year. Michael led over a third of the IFA distribution business in the UK.

Now that he is head of business transition and development, AXA Winterthur Wealth Management, Mike's role focuses on the execution and implementation of the initiatives that drive the business forward.

About AXA Winterthur Wealth Management

The hallmark of the AXA Winterthur Wealth Management business is a proposition built on the strength of two powerful brands, one of the largest distribution networks in the UK life industry, a developing product range to meet clients' wealth management needs and an award-winning adviser support operation. The AXA Winterthur proposition has the style and culture of an entrepreneurial business, with the backing of one of the largest and strongest companies, with a quality balance sheet positioned strongly in the current market. AXA Winterthur offers advisers an innovative, leading approach to investment and retirement solutions. The full range of products from Winterthur, AXA Wealth Management and AXA Isle of Man can be accessed through a single point of contact.

Bob Perkins is technical manager at Origen

Bob started his career in financial services in 1971 and is technical manager at national advisers, Origen. His role is principally to provide a source of technical support to Origen's team in relation to pensions, tax and investment.

In addition, he is frequently called upon to provide commentary and articles for industry publications on technical matters as well as making presentations to clients and in some cases to their employees.

As well as being a member of the CII and Personal Finance Society, he is a member of the Trustee Group of the Pensions Management Institute.

Vince Smith-Hughes is head of business development for retirement income at the Prudential

Vince has worked in the financial services profession for over 25 years, and has previous experience as an IFA as well as holding senior pension roles at Clerical Medical and Winterthur Life. Vince is an experienced platform presenter at industry events and a regular contributor to trade publications on all matters relating to retirement income issues. About Prudential

Prudential is the UK's largest annuity provider - supplying one in four people with their annuity and paying out more than £2 billion in retirement income every year. Prudential has one of the UK's largest with-profits funds, looking after more than £57 billion (as at December 2008) for its investors. In total the Group has over £256 billion under management (as at 30 June 2008), looked after by more than 500 investment professionals around the world. Prudential's range of retirement solutions includes the income choice annuity, the with profit annuity, the flexible lifetime annuity, conventional and enhanced annuities and income drawdown arrangements.