Retirement income specialist LV= has launched a one-year fixed-term annuity for retirees who wish to defer making a decision about how they will take an income in retirement until new rules come into effect.
The product, which LV= says is in response to this year’s Budget, is designed for advisers whose clients wish to take advantage of the flexibility new pension rules will offer, but need an income between now and when they come into effect in April 2015.
Clients who purchase a one-year fixed term annuity are able to access their tax-free cash and, if needed, take an income over the subsequent year. After that, clients will be able to use the capital afforded by their pension pots to purchase an alternative solution such as an annuity or a drawdown plan.
The new product will initially be available from LV= for six weeks, and clients will be able to select any income from zero to 150 per cent GAD.
Clients who may consider the one-year annuity include those who can’t stay in their current pension scheme, those who need to take an income now but want the security of knowing what their remaining fund value will be worth in a year, and those who may want to take their guaranteed maturity value as taxable cash.
Richard Rowney, LV=’s managing director for life and pensions, said: “We have developed our latest fixed term annuity product in response to client and adviser demand in the wake of the Budget announcements.
“This product specifically enables those customers retiring now to access their tax free cash and income, but defer making a decision as to how they take an income from their pension fund, in the long term, until the new rules come into effect in April 2015.
“We believe that fixed term annuities will play an important role in offering those approaching retirement now with a guaranteed income, without limiting their future options. Indeed, we hope that it will give many advisers and their clients the breathing space they require.
“The retirement income landscape is changing considerably and, as such, we would always encourage people to seek financial advice in order to make the most of their pension savings.”
