New market entrant Assured Retirement is claiming to offer up to 30 per cent better returns than the established fixed term annuity and secure drawdown providers.
Assured Retirement provided a table for comparison with a number of other providers. L&G fixed term retirement plan, LV protected retirement plan and Canada Life fixed term income plan were all included.
Both LV and L&G declined to comment on the comparison but a spokeman for Canada Life told FTAdviser that the numbers cannot be directly compared as the Assured Retirement products and the Canada Life products have some differences.
As an example, for Assured Retirement’s protected maturity amount over a one-year term at £95,993 the total overall return is £100,493 and the firm said that this provides a net return rate a year of 0.51 per cent.
Canada Life’s fixed-term income plan for one year provides a protected maturity value of £95,046 and a total overall return of £99,546 with a net rate of return of -0.46 per cent.
By the second year of Canada Life’s policy it should deliver a net rate of return of 0.29 per cent.
John Hiew, chief executive of Assured Retirement, said that for advisers who want to offer clients an alternative to the “inflexibility” of a lifetime annuity or the investment risk normally associated with drawdown, a secure drawdown arrangement is a natural alternative.
Its ‘cash retirement account’ is a new product using technology to offer total returns up to 30 per cent higher than the established providers, he added.
“As far as we know we are the first new provider of pension products post the 6 April flexibility.”
Mr Hiew told FTAdviser they set up the business to specifically cater for what it saw as a “clear gap” in the market with the pension changes and that is a “simple, low risk, low cost drawdown product”.
Mr Hiew added that the company wanted their product to be a halfway house between annuities and drawdown to get the best bits of both products. Yesterday (20 July), Aegon launched a ‘third way’ product on its platform which also promises to offer clients the main benefits of both an annuity and a drawdown product.
Mr Hiew stated that the account is ideal for lower levels of pot size, for example a drawdown cash account of £40,000 to £50,000, and that other providers are typically geared up for larger pension pots.
He said: “It has got the certainty of a lifetime annuity in that you can’t lose money, but its got the flexibility of drawdown that enables you to decide how much you take and when, and of course its got a maturity date so at the end of the maturity date the client or adviser can decide what to do at that point.”
Mr Hiew also claimed that Assured Retirement is the only company that offers a drawdown product which only invests in cash and it is the first company to offer a panel of banks.
Alongside this, for clients with more than £70,000, their money is spread across the banks, so that they are always covered by the FSCS compensation scheme for 100 per cent of their investment.
He added that one of the attractions for advisers was to be able to offer a solution to a client who wouldn’t have otherwise taken advice because they only have a small pension fund.
ruth.gillbe@ft.com
