MGM launches annuity product
MGM Advantage has developed a pensions product geared for those who favour annuities, but which meets the concerns some clients have about firms retaining funds on death.
Andrew Tully, the pensions technical director for MGM Advantage, said: “It is important that annuities are reinvigorated so they remain central to retirement planning in the future. We can offer competitive rates to anyone looking to secure a lifetime income.
“When you combine these new options with the much lower tax treatment on death, annuities are better placed to help customers and their families.”
The new rules annuity brings improved death benefits to the market, offering a money-back guarantee, either through extended income guarantee periods of up to 30 years or returning the balance of any remaining fund on death as a lump sum.
Despite the new flexibilities, many people were still looking for some level of guaranteed regular income in retirement. According to researa study by ComRes, 77 per cent said it was a top priority, while 15 per cent said managing their own money and making sure it lasted was a priority.
The money-back guarantee provides a guaranteed income for any period up to 30 years, in one year increments, and customers can also choose a value protection benefit of up to 100 per cent of the initial purchase price, which would provide a lump sum on death at any age.
“These new options are likely to prove popular with people who were previously concerned about annuity companies retaining the balance of the fund on death,” Mr Tully said.
He said that hard work was needed to promote the benefits of annuities, and that financial advice was key.
It comes as LV= and Legal & General intimated they were looking at entering the second-hand annuity market, to purchase people’s annuities, while Aviva and Aegon UK were said to be less keen.
Adviser View
Brian Hill, financial adviser at Wiltshire-based Jones Hill, said: “The main thing for clients is simplicity, flexibility, and to not have to worry and have peace of mind with a guaranteed income so it is good to see MGM Advantage taking this step.
“We do need to see other stuff from other providers, but clients want simplicity over products. If that can be delivered in a product, then it makes a lot of sense.”
