Aegon launches third way annuity offering

The much anticipated launch of Income for Life is the latest variable annuity product to hit the market as providers increasingly look to bridge the gap between income drawdown and traditional annuities.

Guarantee charges range between 0.5 per cent and 1.6 per cent depending on the investment split spread between fixed interest and equities.

The minimum transfer is £50,000 and the maximum is £1m. The base annual management charge (AMC) is 0.5 per cent for core portfolio funds and 1.15 per cent multi-manager portfolio funds.

There is a choice of four core portfolio funds, four multi-manager funds and one cash fund that the plan can use to maximise investment. The minimum age is 55 and the maximum is 70.

Death benefit depends on the client’s age and whether they are in the alternatively secured pension (ASP), unsecured pension (USP) or annuity at death product.

Advisers have a choice of commission payment options from no commission for those intermediaries working on a fee basis to increasing to various tiered levels dependent on a number of variables.

Mike Douglas, managing director of Aegon’s at retirement division, said the launch is in response to the changing lifestyle patterns and retirement needs of people that are living longer, and more active lives.

"People need certainty of income but also want investment flexibility," he added. "Adding Income for Life to our range of retirement income solutions underlines Aegon’s position as a leading player in the UK retirement market."

Aegon joins The Hartford, Lincoln Financial, Met Life and Canada Life in the variable annuity market, although each product differs in its structure.

Standard Life and Axa are widely anticipated to be launching similar products later in the year.

Read the full report in the June issue of Money Management.