Legal & General is offering more pension flexibility with its with-profits
Customers can split their pension fund between the company's with-profits
plan and a conventional annuity.
The minimum purchase price for the with-profits annuity is £1,000.
Unlike Standard Life's recently launched product, which allows clients to
change their anticipated bonus rate during the course of the plan, L&G
clients must choose a fixed anticipated bonus rate at the outset.
Because of this, L&G says the public should get independent advice before
choosing the level of income they need as this could fluctuate each year
depending on the rate of bonus chosen and the actual bonuses declared.
With-profits-linked annuities are proving increasingly popular due to
falling annuity rates. The Annuity Bureau says the products will gain a 20
per cent market share worth £1.5bn by the end of the year.
The bureau says low annuity rates are pushing up demand for the products.
L&G pensions marketing director Andy Agar says: “We believe this market is
moving quickly from niche to mainstream and fills a very important gap
between the no-risk area of a guaranteed conventional annuity and the
higher- risk area of income drawdown.
“In the future, many people will mix and match conventional guaranteed
annuities to meet the cost of fixed outgoings and with-profits annuities
for the opportunity of an increasing income during retirement.”