Called ‘Secure Advantage+’, the new plan allows customers to choose optional features to benefit from guaranteed income for life that can be turned on and off, and the ability to take more income at the beginning of retirement.
Holders of the plan will also be able to choose different investment strategies according to their attitude to risk.
In addition, customers will be given the option of adding on a death benefit to their plan, which gives named beneficiaries the full value of their drawdown plan, minus any withdrawals taken over the policyholder’s lifetime.
The annual cost of the product varies starting from 0.30 to 0.55 per cent a year, with additional charges for fund management depending on the range of funds the client chooses.
The product, which is provided by sister company Axa Life Invest, is available now for advisers and their clients through Axa Wealth as part of its reform-ready retirement portfolio service.
While a lifetime income is guaranteed, the value of the plan is not.
Transfers, adviser charges, additional income withdrawals or other lump sums taken from the plan will reduce the guarantees paid.
Provider’s view
David Thompson, managing director of proposition and business development, Axa Wealth, said: “Unit-linked guarantees are coming of age. While they may have been more niche in the past, the new pension reforms will open up many new retirement planning opportunities for these types of flexible products. By offering our advisers and their customers access to Secure Advantage+, we are giving people the security of an annuity, but with all the flexibility and benefits of income drawdown. Plus the added advantage of a tried and tested product in the market.”
Adviser’s view
Alan Solomons, director at Alpha Investments & Financial Planning, based in London, said: “You can achieve what the product offers by initially opting for income drawdown then buying into an annuity at a later stage. With this product, if you start using money with drawdown you eat into the capital of your income for life.
“I think that some people will be attracted to the product, but people should take a good look at the costs to establish whether it represents a good deal compared with the alternatives.”
He added: “I welcome product innovation. Not all offerings will be successful, but there will be people who would learn from unsuccessful propositions and evolve them into something marketable.”
Charges
The annual charge is from 0.30 to 0.55 per cent with additional charges for fund management.
Verdict
Flexibility is a term which has been floating around the pension marketplace following the announcement of the pension freedoms last year.
This new product will appeal to those who want the security of an annuity but with the flexibility of a drawdown. However, before rushing into the product, pensioners should seriously consider the charges that are taken for providing any of the optional guarantee features.
With the new pension freedoms rapidly approaching, the lack of new product launches is somewhat baffling. Perhaps providers are still going through the finer points of the changes and seeking clarification of how it will affect their business before releasing their latest offering.
