Money Marketing revealed earlier in the month that Aegon was replacing its five for life product with an age-related income guarantee as a result of prevailing stockmarket volatility.
Five for life, which will be withdrawn on June 29, offers a minimum 5 per cent guaranteed income for life from age 60. The secure lifetime income plan will provide age-related guaranteed income levels.
Customers aged between 75-79 will receive the same level of guarantees as with five for life although people aged 70-74 will get guarantees slightly lower at 4.5 per cent per annum.
Customers aged between 65-69 will receive a 4 per cent guaranteed income for life while those aged 60-64 will get guarantees of 3.5 per cent per annum under the new product – a 1.5 per cent drop.
The product is written on a single life basis. Only single contributions are allowed and must be between £15,000 and £1m. A minimum of 20 per cent and maximum of 50 per cent of the investment must be in equities.
The secure lifetime income guarantee also provides an income escalator feature, which lets customers lock in increases in income levels.
Each year Aegon will review the cash-in value of the plan and if it is higher than the original contribution or any previous annual valuation the guaranteed amount will increase.
Aegon insists there will be no change to the terms and conditions for existing five for life customers.
Money Marketing revealed in March that Aegon was increasing prices on its income for life plan after market volatility caused the cost of guarantees to shoot up for all third way players. The firm reduced the level of guaranteed income by 1.5 per cent for new business across all age brackets.
Metlife also put prices up on its variable annuities in March.
Aegon, Metlife and Lincoln, which has since been bought up by Sun Life Financial, rushed to reassure advisers that they are committed to the third way market after The Hartford pulled out of the UK in May.
Melville Hutchison Financial Management director Malcolm Good says: “This product would not be right for all circumstances but for certain clients I can envisage it being an attractive option, in particular through its flexibility.”