Legal and General has revealed further details of its new at-retirement products, stating that it provides further income security for consumers as the firm is guaranteeing the income.
Earlier today, L&G revealed it will launch a “cash-out retirement plan”, which provides a “simple mechanism” by which consumers can access their retirement savings. Consumers can withdraw agreed fixed amounts over a set period to fund immediate spending requirements, or minimise tax by taking withdrawals over a longer term.
Lastly, a “fixed-term retirement plan” converts a portion of an individual’s retirement savings into contractual payments over a period of their choosing, returning a pre-agreed lump sum amount to the customer at the end of the fixed term.
Speaking to FTAdviser, David Pope, L&G’s distribution director for individual retirement, said all three products will be available from 7 April.
Mr Pope said the major advantage of the new ‘cash-out retirement plan’ is that L&G guarantees the income so the consumer has security of income for the period.
He added that the ‘cash-out retirement plan’ was written under drawdown rules like most fixed term annuities but that L&G guarantees the income - whereas in flexi-access drawdown the consumer takes the risk.
Mr Pope said: “It is a variation of a fixed term annuity. It is a fixed term annuity without a maturity value. It is designed for people to take money out over a three, four, five year period so tax efficiency is the big driver alongside certainty of income, and that was researched very strongly.
Furthermore, L&G told FTAdviser it is set to update its website for customers, which will include a new product selector tool called the Retirement Income Calculator on its site
The new website will have much more information and signposting for consumers, supporting the Pension Wise guidance, but also a new tool.
Mr Pope said the firm had developed prototypes which were then discussed with customers in the process of designing the ‘retirement income calculator’.
The tool allows those on the site to select either one product or a mix of product and place variable amounts of money in accordingly, however at this stage Mr Pope said the firm were “still playing around with it a little bit” before the new site goes live on 7 April.
Mr Pope added: “I can’t speak for other providers but we are ready, we think we have the right range of products.
“The challenge for everyone is we don’t know for definite what people are going to do. Until a pattern of behaviour emerges we can’t tell what is going to happen - there are a lot of variables with the Pension Wise guarantee.
“We think people should take advice but we don’t know whether they will or not.”
ruth.gillbe@ft.com
