Story link: LV= launches investment-linked annuity
Article from Insurance Daily
by Gill Montia
LV= has launched Pension Income Plus Annuity (PIPA), an investment-linked lifetime annuity that allows clients to have a relatively high level of initial income, alongside a minimum income guarantee.
Customers can select an assumed investment return (AIR) of between 0-4% at the outset, which determines their starting income and, along with investment returns, how their income will vary each year.
However, they are protected from falls in investment returns by a minimum income guarantee, which is set at the 0% AIR income level and will never decrease.
In the event of an improvement in investment yields, the guaranteed minimum income (GMI) increases, and locks in a proportion of the investment returns received.
The GMI will then rise by half of the percentage increase in income received above its previous highest level.
Rates are available on standard and enhanced terms, with around 1,400 medical conditions qualifying for enhanced rates of up to 20%.
PIPA funds are invested in the LV= with-profits fund and the mutual offers a “money where our mouth is” guarantee whereby it will pay customers £1,000 if tax free cash isn’t released within five working days of receiving the required paperwork and pension funds.
LV=’s head of annuities, Matt Trott, comments: “Investment-linked annuities are increasingly popular in the UK market, with advisers and clients alike looking for more flexible and cost effective alternative solutions to standard lifetime annuities.”
He adds: “Linking an annuity to an investment allows the fund to continue to participate in possible growth, while the GMI provides a secure lifetime income.”
Last week, LV= competitor, MetLife called for more innovation in the retirement products market, for example, in the area of fixed-term annuities.
These allow clients to transfer to another retirement product during their selected term, should they become ill and qualify for enhanced terms on a lifetime annuity, or if the dependant attached to the plan should die.
