The Guaranteed Capital Benefit is a partial guarantee over a term of 5-7 years, designed to protect pension savers from "catastrophic losses", according to AXA. Available across a pension, offshore bond and Trustee Investment Plan, policyholders get a minimum of 80% of what they put in. If their investment grows sufficiently, the lock-in feature converts to 110% of their pension pot and can result in greater gains if markets continue to rise, through additional threshold steps of 10%. Once the investment has risen, to 110% or beyond, it will never go down again unless they make any surrenders or transfers from the guaranteed part of their Plan.
AXA Life Invest has also launched Legacy Protect, a direct response to the pension reforms, allowing people to pass on their pension tax-free in the event of early death. This follows on the success of its Protect75 product, the first death benefit to allow anyone in an income drawdown plan to protect the amount they pass on to family or dependents if they die before age 75.
Simon Smallcombe, Managing Director of AXA Life Invest UK, said:
“Today we are reinventing and re-imagining a new future for guarantees in retirement planning. Guarantees have a real role to play in 21st century retirement planning. But first we must move past the dinosaur products of the previous generation, which are too expensive, too low in equity content, or too long term. If we want any kind of future for guarantees in retirement planning, providers must create new solutions based upon clients’ needs.
“Meanwhile advisers must rise to the challenge of a much more nuanced and sophisticated task in preparing clients for retirement, making a range of recommendations at different times, some with guarantees, some without.
“The days of shoehorning clients into annuities are long gone. Savers no longer want an off-the-shelf solution; they want a tailor-made pension to fit their needs. It’s time to shake loose the shackles of annuities, embrace the interminable rise of drawdown and put advisers and their clients in the driver’s seat.”
