L&G to launch blended retirement product

L&G to launch blended retirement product

Legal and General will launch a retirement service catering to all stages of retirement by allowing customers to mix different forms of income.

The financial services company has said it will allow customers to mix together different products including drawdown, annuity and inheritance to allow them to manage retirement outcomes.

L&G’s new product will launch by the end of this year and it has already set up a prototype which it will test alongside customer research.

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The company has said the pension freedoms had thrown up a lot of choice for customers and there was a need for the industry to respond to bespoke requirements.

Emma Douglas, head of defined contribution solutions at L&G, said: "Retirement customers often don’t know where to start when it comes to saving for their retirement.

"There is so much choice out there and certain products are more suitable for particular stages of retirement. This service will help people think differently about their assets and savings and help them divide what they have between different retirement pots."

The new service from L&G is similar to the blueprint launched by the National Employment Savings Trust (Nest) in response to the pension freedoms.

Nest outlined a three-step retirement income strategy designed for its savers to take into account the pension freedoms and catered to each stage of retirement.

But the government did not grant approval for Nest to implement the strategy and decided it should be carried out by other industry providers.

"As the years go on, the demographic of retirement customers will change," said Douglas.

"At this stage we aren’t seeing so many people having large assets in defined contribution schemes but this is to change in coming years.

"There will be a lot of old customers that are in defined benefit schemes, but as entry closes for these we will see a lot of the next generation in DC schemes. What matters is that customers have the choice to manage their retirement income, not everyone will want to fill all pots and our service will enable them to have that choice."

L&G has said that it will be working with Smart Pensions, an auto-enrolment start-up which it bought a stake in several years ago, to provide the service and ensure a good user experience.