Advisers say Aegon’s decision to scrap its 5 for life product in favour of an age-related income guarantee was “inevitable”.
moneymarketing.co.uk revealed on Tuesday that the firm is pulling the product, which offers a minimum 5 per cent guaranteed income for life from age 60, due to “market conditions”.
The replacement secure lifetime income plan will provide age-related guaranteed income levels from June 29, which are likely to be less generous.
Aegon Scottish Equitable International managing director David Healy says: “The new secure lifetime income plan aims to meet customer needs in the current market and will provide valuable guarantees at an appropriate and affordable cost.”
William Burrows Annuities director Billy Burrows says: “The brutal reality is that the cost of providing these guarantees has increased considerably so it is inevitable that the benefits would reduce. Providers will probably have to wait until the financial storm has blown away before people will take them seriously again.”
Terms for existing 5 for life customers remain unchanged.