MetLife has launched a flexible guaranteed drawdown product that combines drawdown investing with a lifelong guaranteed level of income. The product is targeted towards investors with low risk tolerance. The fund is being managed with investment expertise from BlackRock and Fidelity.
The product is designed in response to the pension freedoms and provides a “guaranteed income” depending on a client’s age by investing their money in two funds, moving between the two depending on market movements and reactions.
The retirement portfolio product offers daily lock-ins and a deferral rate of 5 per cent pa for savers who invest in the Secure Income Option. By choosing this option, savers can start, stop and restart their income depending on their personal needs.
The guaranteed income percentage depends on the age of the client and ranges from 2.5 per cent for a 50-year-old to 5.25 per cent for 75 and older. The Secure Income Option enables the client to take income from age 55 and depends on the age of the client at the date the option is selected. The product also provides options to savers to access their investment or transfer to other plans or retirement income solutions without incurring charges. The investment side is divided with 30-40 per cent in equities and the remainder in fixed income. BlackRock will run the equity portfolio used by the product while Fidelity will run the fixed income side. The minimum investment is £30,000.
www.metlife.co.uk
Comment:
Guaranteed income for life is still popular among pensioners. MetLife’s latest retirement product combines drawdown investing with a lifelong guaranteed level of income. But how is this going work?
According to MetLife, a 65-year old with a £250,000 investment would face all-inclusive charges of 1.65 per cent and could attract a 4 per cent guaranteed income equating to £10,000 a year.
The portfolio, available to investors through financial advisers, offers flexibility in terms of choosing the benefits available with the new pensions freedoms.
Interest in income drawdown may have increased since pensions freedom were introduced in April this year, but research from MetLife shows strong support for guaranteed income among advisers and clients.
This product bridges the gap between annuities and drawdown and is a good option for those looking for that mix.
PRODUCT FACTS:
• Product offers lifelong level of income
• Offers a guaranteed income depending on your age
• All-inclusive charge of 1.65 per cent
• Invests in equities and fixed income
• Investments managed by BlackRock (Global Growth) and Fidelity (Corporate Bond)
