This product is aimed at the 50% of 65-year olds people with a health or lifestyle condition who may traditionally have bought an annuity but don’t wish to fully commit to purchase prior to the introduction of the new pension regime. This will give them access to their 25% tax free lump sum and a guaranteed income for life plus the ability to benefit if their health deteriorates , interest rates rise or they decide another option is more suitable. The consumer has complete choice and certainty.
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.
Other benefits of this product include full underwriting 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; and 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).
The product –available exclusively via intermediaries – will allow people to annuitise pension pots of £10,000 or more. This means that not only will those with ‘small pots’ have access to this annuity but people can choose to annuitise a small proportion of their retirement assets as they decide on the best course of action for their individual circumstances.
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.
“However, while these changes provide more options, many people who are facing retirement in the immediate future are unsure of what to do and wish to provide themselves with the opportunity to fully consider their options. This has provided us with an excellent opportunity to grow and innovate our product range to help people navigate this new landscape.
“The Enhanced Choice Annuity not only allows them immediate access to a predictable income and their tax-free lump sum but offers them the opportunity to continue to benefit from the security of a guaranteed income for life if they feel that this is the best option for them. However, if they decide there are more attractive options in year then they can switch out. We continue put the customer at the heart of all that we do.”
