LV=’s managing director of life and pensions said clients who purchased the annuity would be able to access their tax-free cash and if they required, could take an income until April 2015.
At the end of the term, clients receive a guaranteed maturity value and, as with other fixed-term annuity products, will be able to use the capital to purchase an alternative retirement income solution.
The product will initially be available for a period of six weeks with clients able to select any income from nil to 150 per cent of the Government Actuary’s Department rate.
Mr Rowney said the annuity had been developed in response to client and adviser demand in the wake of the chancellor’s Budget announcements in March and would suit people who couldn’t stay in their current pension scheme.
He added: “It allows those 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.
“As people continue to spend longer in retirement it is vital that they have flexibility as to how they structure their income and the chancellor’s announcement has given them just that. However, there will be a 12-month delay until all the latest changes are implemented and the industry is going through a period of transition.
“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.”
When asked, rival providers MGM Advantage and Just Retirement said they had no plans to launch a similar product, while Partnership declined to comment.
| Longevity |
This came as research from MGM Advantage of 2,028 adults revealed that 79 per cent of men, and 85 per cent of women approaching retirement age underestimated their likely longevity. Aston Goodey, sales and marketing director for MGM Advantage, said: “It’s important that people have a realistic expectation as to how long they are likely to live. With the increased choice of pension reforms comes the risk people may live longer and outlive their savings.” |
Adviser view
Phil Castle, chief executive of Kent-based Financial Escape, said: “I’m not sure I can see the purpose for this and I think people should defer until we know more about the new rules next year. They can drawdown during that period and have more flexibility than being in an annuity, and the income will be peanuts anyway.”
