Axa Life Invest has launched a new unit-linked guarantee product designed to give savers more flexibility over how they take their retirement income.
The provider has launched Secure Advantage+ in a bid to capitalise on radical pension reforms announced during the Budget.
The reforms, which come into force in April 2015, mean anyone aged 55 or over will be able to take their entire pension pot as cash without being hit with a 55 per cent tax charge. Instead, they will be taxed at their marginal rate.
The new Axa guaranteed product includes an “income reward” bonus that allows clients to take more out of the plan in the early years of retirement.
Under the terms of the bonus, for every year an individual takes out the policy prior to drawing an income the provider will top-up their guaranteed income by 2.5 per cent post-retirement.
Axa says clients can adjust the guarantee and the income they take depending on their individual needs and can also choose to take out a drawdown or personal pension contract and add the guarantee later on.
Charges for the product vary depending on the options taken out. The guaranteed income charge ranges from 0.95 per cent to 1.5 per cent for the single life option and 1.4 per cent to 1.7 per cent for the joint life option.
Customers will also pay a “contract management cost”, ranging from 0.3 per cent to 0.55 per cent, and a fund management charge of between 0.5 per cent and 0.7 per cent. The minimum investment amount for the product is £25,000.
Axa Life Invest UK managing director Simon Smallcombe says: “To date providers and advisers have focused largely on asset accumulation strategies throughout the pre-retirement phase.
“But post-Budget innovation and advice must focus on effective decumulation strategies to support retirees who have active lifestyles and active investment goals in their early retirement.
“While it is clear that retirees should be able to make their own decisions, providers and advisers cannot leave them out in the cold. A guaranteed minimum income remains a definite need for many.”