2nd April 2014
Retirement firm LV= has launched a one year fixed term annuity in response to the Budget. The product, offered through advisers, is designed to allow retirees to receive an income while they consider how they may want to take advantage of the new rules.
The firm says that investors who purchase a one year fixed term annuity will be able to access their tax-free cash and, if they need to, take an income over the next year.
At the end of the 12 month term, clients will receive their Guaranteed Maturity Value (GMV) and, as with other fixed term annuity products, they will be able to use the capital to purchase an alternative retirement income solution.
The product will be available for the next six weeks. Clients who purchase LV=’s fixed term annuity will be able to select any income from nil to 150% GAD.
LV+ suggests that those who might consider purchasing a one year fixed term annuity include
· those who can’t stay in their current pension scheme
· those who need to take an income now and want the security of knowing what their remaining fund value will be worth in twelve months’ time
· those who may want to take their GMV as taxable cash
Richard Rowney, LV= Managing Director, Life and Pensions says: “We have developed our latest fixed term annuity product in response to client and adviser demand in the wake of the Budget announcements. This product specifically enables those customers retiring now to access their tax free cash and income, but defer making a decision as to how they take an income from their pension fund, in the long term, until the new rules come into effect in April 2015.
“As people continue to spend longer in retirement, it is vital that they have flexibility as to how they structure their income and the Chancellor’s announcement has given them just that. However, there will be a twelve month delay until all the latest changes are implemented and the industry goes through a period of transition. We believe that fixed term annuities will play an important role in offering those approaching retirement now with a guaranteed income, without limiting their future options. Indeed, we hope that it will give many advisers and their clients the breathing space they require. The retirement income landscape is changing considerably and, as such, we would always encourage people to seek financial advice in order to make the most of their pension savings.”