AXA Life Invest has introduced a new advanced guaranteed drawdown product following reforms in this year’s Budget. It aims to offer pension savers more flexibility and security.
The Secure Advantage+ is different from other unit-linked guarantee products due to the customer being able to take more income at the start of retirement to pay for the higher costs of an active lifestyle.
AXA Life Invest says it has the stability of an annuity but the flexibility of drawdown - a direct response to customer needs. Unlike an annuity, the product allows customers to remain invested with the option of taking out a guarantee and thus being protected from any potential market falls.
Customers must make an initial payment of at least £25,000, plus any basic rate tax relief. They must also give up any rights under an existing pension arrangement for any pension funds that are transferred to the plan.
The plan will enable pension savers to plan in advance, knowing they will have certainty of income throughout retirement no matter how the market performs. It gives regular premiums as well as a guaranteed death benefit option. On death, the minimum that will be paid out is the value of the fund, with an additional guaranteed death benefit provided for the first 10 years of the plan.
MM Comment:
Having flexible retirement income products available is exactly what the industry needs.
With the shake-up of the pensions space, this product is a new take on allowing savers to maximise the first years of retirement without blowing all their pension pot in one go.
The fact this product has features which allows savers to maximise their guaranteed income in the early years of retirement is a key benefit. The first years of retirement are those when savers can enjoy it the most due to their more active lifestyle.
This also allows customers who defer retirement to benefit from an increased level of guaranteed income - the longer they remain invested pre-retirement the longer they will receive a higher income in retirement.
People are still looking for peace of mind when it comes to retiring and securing an income in retirement. This product could be a significant step in the right direction.
