Another provider to launch low cost drawdown product

Another provider to launch low cost drawdown product

Partnership is set to follow Metlife’s footsteps by launching a low cost, guaranteed drawdown product.

The Enhanced Retirement Account will combine a guaranteed annuity income with flexi-access drawdown through a single self-invested personal pension wrapper.

This contains an investment element - the flexi-access drawdown account - an interest-bearing cash account and a guaranteed element - an annuity - and is aimed at what Partnership estimates is more than 60 per cent of customers who qualify for an enhanced annuity due to ill-health or lifestyle choices.

Any unused income can be rolled up into the product and withdrawn as part of the regular payment, while death benefits for the flexible investment element are subject to current HM Revenue and Customs rules and guaranteed options - up to 20 years - available on annuity.

The account is available to new customers between ages of 55 and 85 with funds of £10,000 to £1 million, with crystallised and uncrystallised funds accepted.

Customers can choose to invest in a range of eight Vanguard life strategy funds as well as an interest-bearing cash account and an Isa.

The new guaranteed drawdown product will have total charges of between 0.47 and 0.65 per cent and no transaction fees.

As it will only be available through independent financial advisers, the Enhanced Retirement Account will be subject to a maximum initial adviser charge of 5 per cent of premium and maximum ongoing charge of 1.5 per cent of flexible element.

The firm be working to educate advisers about the potential for these products via roadshows and face-to-face briefings ahead of being in a position to provide binding quotes in October.

Earlier this month, Metlife launched a flexible guaranteed drawdown product, designed in response to pension freedoms, letting savers start, stop and restart their income to suit personal needs and if income is stopped, the income deferral increases restart.

Figures from software provider Selectapension for April to August revealed that 59 per cent of people are now choosing to guarantee the drawdown of their pension pots, while just 41 per cent are looking to purchase a guaranteed annuity.