IFAs wait to see fixed-term annuity fees

Advisers have welcomed Living Time’s return to the fixed-term annuity market, although uncertainty remains over how much it will charge on the new product.

Last week, the company revealed details of the new product following a rebranding exercise which sees it change its name to Primetime Retirement.

The new plan, which is to launch at the end of the first quarter, will be available through the firm’s own Sipp wrapper.

Investec will provide a structured deposit product to support the fixed-term annuity, meaning investors will be covered by the Financial Services Compensation Scheme up to £85,000. Primetime expects to have between three and five versions of the product available when it launches.

Investors will also have the ability to leave the fixed-term if they suffer a significant life event which could include ill health or if a spouse or named dependant dies.

Primetime chief executive Kim Lerche-Thomsen says: “We think that people still want fixed income, they want a guaranteed return, they do not want downside investment risk but actually they do like the idea of having some potential for investment gain.

“They also like better death benefits and they like to keep their options open. That is what our new plan will deliver.”

Lerche-Thomsen refused to give details of the products’ charges.

Informed Choice managing director Martin Bamford says: “It is good to see a provider innovating in the at-retirement market but I still have reservations about fixed-term products because the charges tend to be high. Until Primetime publicises the charges in full, advisers will be unable to judge whether or not this represents value for money.”

Living Time pioneered the fixed-term annuity concept in 2006. The firm subsequently agreed an exclusive distribution deal with MetLife in January 2011. MetLife launched its own fixed-term annuity product, the Freedom Income Plan, in September.

Aviva, Just Retirement and LV= also offer fixed-term annuity products.