GBST, which provides wealth administration software, has upgraded its technology for wrap and platform providers to include a new standalone annuity functionality.
The new standalone annuity product can be accessed via the open market option (OMO), immediate vesting pension (IVP) or a combination of both.
In each case, multiple transfers from ceding schemes can be used to purchase one standalone annuity and a portion of the pension can be taken as tax-free cash.
The new product enhances the process of administering annuities on the GBST platforming, including offering flexibility over payment options in advance or in arrears, choice of frequency and ability to process annuity payments any day.
The tool gives the ability to offer level or escalating annuity payments plus full payroll functionality for annuity payments, including real time information reporting, payslip creation, regulatory reporting and upload of tax codes from HM Revenue & Customs.
It has the ability to configure the death benefit options available within the product and to process the options selected.
It also allows the bulk process of payment of pension commencement lump sum (tax-free lump sum) and annuity benefit calculation on receipt of immediate vesting pension transfers.
David Simpson, head of EMEA at GBST, said: “There is still an important place for annuities within retirement planning, particularly for those with smaller funds.
“By streamlining and automating much of the work involved and creating a joined-up process, providers can offer more flexible pension options, while making it more viable for financial advisers to provide a retirement advice service to those with different sized pots.”
Financial services provider Retirement Advantage will be the first to use the new functionality.
Craig Fazzini-Jones, group chief executive of Retirement Advantage, said that the new feature will complement the existing retirement account product on the GBST platform, and facilitate the “migration of new business to a single platform for all annuity and pension drawdown products”.
According to Billy Burrows, director of Retirement IQ, more and more advisers are setting up drawdown on platforms, “so it makes sense to introduce the option to easily purchase annuities alongside drawdown investments”.
He said: “At the moment, the scales tip in favour of drawdown but this could change if yields increase and markets wobble.
“If annuity rates improve, there will be a stronger case to purchase annuities alongside drawdown in order to secure guaranteed income and reduce risk.”
Mr Burrows said that the option to arrange annuities on platforms “is a welcome development as it will help advisers tailor retirement solutions to their clients’ individual needs”.
It will also “wean advisers away from black and white solutions and towards combinations of annuities and drawdown,” he concluded.