Legal & General has unveiled its retirement income options for customers following the introduction of the pension freedoms but will not be offering drawdown on a non-advised basis.
Last week, Money Marketing revealed the insurer was launching a fixed-term annuity. Its results, published today, reveal details of the new options available to customers from April when the pension freedoms take effect.
Advised customers of the fixed-term retirement plan will be able to take a contract out for between three and 40 years, while execution-only customers will be limited to a maximum of 25 years. Payments can be monthly, quarterly, half yearly or yearly and can be designed to increase over time. A pre-agreed lump sum is paid on maturity. The minimum investment transferring in from a pension plan or by making a gross personal pension contribution is £10,000.
In addition, L&G is launching the cash-out retirement plan, which has the same parameters and minimum investment as the fixed-term product but does not pay a lump sum on maturity.
Advised customers will be able to enter drawdown contracts, but this will not be available for customers acting on their own.
L&G individual retirement business managing director Bernie Hickman says: “In April we won’t be offering a non-advised product. We’re still open minded about how we position non-advised drawdown. If you want your pension fund to pay you a level of income you have to really understand what you’re doing to get a drawdown product to provide a stable level of income.
“You have constantly monitor what your investment performance has been, where you’ve got your funds invested, over time. And you’ve got to make sure it lasts long enough. It’s not a straightforward product for consumers who are not taking advice to use.”