The third-way plan targets people between 55 and 75 with over £50,000 of pension savings who do not want to lose investment and inheritance control but still want guaranteed income.
There are two guarantees, one making sure that income levels cannot fall and an escalator which allows income to increase each year if the underlying investments perform well.
Income for Life invests in nine funds across a range of risk profiles, including a choice of four passive equity funds, four active equity funds and a cash fund.
The guaranteed income will cost between 0.5 to 1.6 per cent, depending on equity exposure. The guaranteed income level will depend on whether a single or joint-life plan is chosen. Those opting for a single-life plan, taking income at age 60, will receive guaranteed income of 5 per cent for life. At-retirement managing director Mike Douglas says: “We believe Income for Life and similar retirement products are likely to suit about 10 per cent of that market and we recognise the growth potential.”
Hargreaves Lansdown head of pensions research Tom McPhail says: “This product appears to be nice and clean, simple and transparent and has managed to avoid some of the shortcomings we have seen with existing products.”