Those purchasing an investment-linked annuity could increase their returns by up to 23 per cent by using equities as part of their portfolio, according to MGM Advantage.
All six main funds available within the firm’s flexible income annuity have delivered an increase in income over three years.
The fund range consists of the Adventurous Passive, Balanced Passive, Cautious Passive, Jupiter Merlin Growth, Newton Balanced and Investec Cautious.
If a 65-year old customer had invested £100,000 three years ago, they could have selected starting income of £6,100 a year, now that income would have increased to anywhere between £6,456 and £7,527 a year; up to 23 per cent higher.
Andrew Tully, pensions technical director at MGM Advantage, said: “Although past performance is clearly no guide to the future, customers using equities as part of their retirement portfolios will have seen substantial increases in their incomes over the past three years in the vast majority of cases.
Mr Tully added that with the new pension freedom, people are looking for alternatives to traditional at-retirement choices.
The firm’s research with 2,060 UK adults aged 55-years-old plus showed that 32 per cent of pre-retirees would retain some equity exposure to offset the negative effects of inflation on their retirement income.
peter.walker@ft.com
