Partnership has unveiled a new hybrid Sipp combining annuity and drawdown options while providing an opportunity for investment growth.
Called the Enhanced Retirement Account, the product features a flexi-access drawdown account, an annuity as well as an interest-paying cash account and an Isa.
It is aimed at customers who qualify for an enhanced annuity due to ill-health or lifestyle choices.
The flexible aspects of the product will be managed on wrap platform IFDL, and customers will be given the option to invest in a range of eight Vanguard Funds.
What is more, unused income can be rolled up into the product and withdrawn as part of the regular payment when customers so desire.
ERA will only be made available through financial advisers to new customers between the ages of 55 and 85 with funds of £10,000 to £1m. Uncrystallised funds will be accepted.
In addition, Partnership said it will seek to educate financial advisers about the product through roadshows and face-to-face briefings – ahead of being in a position to provide binding quotes in October.
Andrew Megson, managing director of retirement at Partnership, said: “The introduction of the pension freedoms presented a challenge to the financial services industry and we feel that the launch of this product ushers in a new era for pensioners. Providing people with the reassurance of a guaranteed income while allowing them to benefit from investment growth as well as flexible drawdown means that people have’ the best of most worlds’.
“Unlike some other products, the Enhanced Retirement Account can grow and change with customers’ requirements. While someone may well wish to invest for growth in their 60s, they may be more comfortable with a higher guaranteed income in their 80s – this product offers people this option – supported by acknowledged experts in their respective fields.”
Gareth Reynolds, financial planner at MGS Financial, based in Staffordshire, said: “There are a lot of options available to clients at retirement. Having a product that combines guaranteed income and flexi-access drawdown gives clients the best of both worlds – which is especially good at the moment, given high market volatility.
“The charges sound reasonable. If you are using a platform and offer passive funds, you are likely to come to that price range – 0.47 per cent to 0.65 per cent. Financial advisers will charge whatever suits their business model, but clients need not worry as they are likely to find one that offers their service at a reasonable cost.
He added: “Distributing the product through advisers makes sense because it is not straightforward.”
Total product and fund charges of between 0.47 per cent and 0.65 per cent on top of adviser charges. No transaction fees.
Pension providers have been relatively slow off the mark when it comes to product innovations following the announcement of the pension reforms. Here, the ERA offers the three main requirements at retirement – flexibility, income and growth – in a nice and neat package at a reasonable cost.