Pension product innovation won’t be evident until early 2016 as providers face the challenges of the evolving retirement income market, forecast AKG.

The independent market consultancy says that the main barriers for providers developing new products involve connecting with evolving consumer requirements, the difficulty of forecasting sales for new products in a changing market, and the risk of making mistakes and committing capital needed for product and system innovations while the market adjusts.

Matt Ward, Head of Communications at AKG, said:

“The pension freedoms story so far is of a relatively muted market which has still to find its pace and rhythm but we expect developments to gather pace during the second half of 2015 as providers adjust to new adviser and consumer requirements.

“As such we anticipate that 2016 will be an extremely interesting year indeed for the broad range of market stakeholders seeking to capitalise on retirement income market opportunities.”

The company has today (Wednesday) launched the report Pension Freedoms: Clearing the hurdles to business success in the retirement income market. The paper is based on the views of a group of leading retirement income experts and research with advisers and consumers, and outlines the challenges of pension freedoms for both advisers and providers.

The report stresses that the majority of providers will need to offer drawdown in order to succeed and other organisations aiming to address the market such as platforms and asset managers will have to offer solutions designed for drawdown.

Ward added:

“We have sought to create a platform for the consideration and discussion of some of the key challenges and opportunities, some old and some new, which present themselves to financial advisers and the companies operating across AKG’s assessment sectors.”

“As current assessments are taking place in the early throes of pension freedoms they will provide us with vital business indicators, but the acid test of business success will come in our 2016 and 2017 assessments when the pension freedoms market has matured and we can formally review the progress of the various company strategies.”