In the current uncertain pension environment, some consumers are reluctant to commit to purchasing an annuity – even if they value the tax-free lump sum and guaranteed income. Partnership is therefore delighted to launch the Enhanced Choice Annuity: an annuity guaranteeing income for life but with the ability to cash in after 12 months.
This product, which is offered exclusively via intermediaries, is aimed at those people who need their income and would clearly benefit from the guarantees of an annuity but want to retain some flexibility in advance of the changes and potential new opportunities presented by the changes to the pension regime. Half (50%) of them may have a health or lifestyle condition and, with this new product from Partnership, can still benefit from an increase in income due to underwriting.
It will allow advisers to offer their clients’ access to their 25% tax free lump sum and a guaranteed income while at the same time offering them the freedom to change products if their circumstances change, health deteriorates or interest rates rise. Other benefits of this product include:
• Fully underwritten to ensure health conditions are taken into account
• A value protection lump sum on death within the first year
• Spouse and dependants’ pension options
• Escalation options, including RPI
• Opportunity to surrender at the first anniversary and buy an another annuity (including one with Partnership), use drawdown or take the cash (subject to tax at marginal rate)
• Low minimum pot size of £10,000 (after PCLS) – allowing people to annuitise a proportion of their retirement assets – if they so wish.
The Enhanced Choice Annuity differs from other providers’ offerings in that a consumer can choose to keep the product after the one year anniversary with a known guaranteed rate – rather than being forced to automatically exit as with fixed term annuities. This helps to protect them from interest rate movements as, if rates go down, they can stay with Partnership with no reduction in income but, if rates increase, they can move.
Andrew Megson, Managing Director of Retirement, Partnership, said:
“Partnership has been campaigning for more consumer choice around retirement income for years and the recent budget introduced what is arguably the biggest shake up of the system for a generation. This has provided us with an excellent opportunity to grow and innovate our product range to help people navigate this new landscape.
“However, these changes have also provided some significant challenges for the people who are retiring in the immediate future – and their advisers. To help people navigate this uncertainty, we are launching the Enhanced Choice Annuity which provides the benefits of a lifetime annuity with the flexibility to cash in after 12-months if their circumstances change, interest rates rise or a better deal becomes available.
“We are committed to helping our intermediary partners to provide their clients with the best possible range of choices and believe this new product will provide the flexibility they need to ensure that people don’t delay making the right choice in the hopes something better may be on the horizon.”
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