Personal PensionApr 17 2015

Canada Life reveals pension freedom product pricing

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Canada Life reveals pension freedom product pricing

Canada Life has announced the pricing structure of its pension investment plan and flexible drawdown plan, which were launched earlier this week.

Late in March the firm said it was to launch a trio of products, including in addition to a standard flexible drawdown offering a hybrid ‘fixed-term’ plan offering guaranteed income for a set period, and a pension investment plan to offer a single consolidated solution.

Canada Life said that the costs for setting up the fixed-term income plan is dependent on when the income is calculated.

Both the pension investment plan and flexible drawdown plan have the same fees, levying a 0.65 per cent annual management charge for investments between £0 and £25,000; a 0.35 per cent change for investments between £25,000 and £50,000; and a 0.3 per cent charge for investments between £50,000 and £100,000.

For investments between £100,000 and £500,000 the annual management charge is 0.2 per cent; for investments between £500,000 to £1m the annual management charge is 0.2 per cent; for investments between £500,000 and £1m the annual management charge are priced at 0.1 per cent and there is no annual management charge for investments that are over £1m.

Charges are applied at a monthly rate of one twelfth of the annual management charge based on the fund value at the time.

Other than fund manager’s charges, the pension investment plan and flexible drawdown plan do not have any set up fees, fund switching charges or other product and transactional fees, and customers can choose from over 150 funds.

Elsewhere, the firm reported a 30 per cent increase in customer enquiries on Monday (13 April) since the new pension freedoms took effect on April 6.

Canada Life said that almost 75 per cent of calls about retirement were from individuals who want to cash in their pension pots, with the rest considering the new flexi-access drawdown or an annuity in equal measure.

The firm added that of the calls received, only 8 per cent had sought guidance from Pension Wise before contacting the firm.

Yesterday (16 April), the Association of British Insurers announced that in the first week of the freedoms its members received 229,932 phone calls from customers interested in finding out more about their pension options under the reforms.

Richard Priestley, executive director individual onshore at Canada Life, said: “The initial calls we have received indicate that there is a large appetite among our existing customers to take advantage of the new freedoms and manage their pension savings to best suit their individual needs but one thing remains the same – that retirement income decisions are best made with financial advice.

“The challenge for advisers fielding queries from clients about their new options, is to help clients navigate this complex new landscape, by clarifying what the new changes will allow whilst ensuring that individual needs are still met.”

ruth.gillbe@ft.com