The Annuity Clearing House has launched a new retirement income service allowing IFAs to outsource work for their lower-income clients.
ACH will search conventional lifetime annuities, enhanced and impaired annuities and with-profits annuities, initially from Prudential, Legal & General and MGM Advantage. The company plans to increase the number of providers as the service expands.
It says the service will specialise in securing competitive income rates for clients with pension pots ranging from £1,000 to £50,000.
ACH chairman Peter Quinton will try to ensure all companies used are in the top third of annuity providers. He says the service will probably add a fixed-term annuity provider to its roster within the next two years.
IFAs will be able to earn fees for introducing clients to ACH, earning 1.1 per cent of annuity purchase price from conventional annuities, 1.4 per cent from with-profits annuities and 1.7 per cent from impaired and enhanced annuities.
The ACH will not be available directly to consumers and it will only deal directly with clients on annuity purchases so that clients remain with their advisers for other areas.
Quinton says: “ACH radically changes the game. It gives retirees access to a wider choice of solutions and better levels of income rates. At the same time, it enables IFAs to earn money from submitting business to us rather than turning it away.”
Annuity Exchange managing director Stuart Bayliss says: “The service may be attractive to IFAs who do little annuity business and cannot keep up to date with what is happening in the annuity world. They would be better off – in other words, the margin they would make for themselves would be greater – if they found a way of using a third party to deliver that specialist advice.
“The basic proposition of saying ’Here is some income for doing something you really can’t make money out of’ is sound but to a certain extent that is what has already been tried with the specialist desks in some of the networks.”