Type: Individual personal pension with capital guarantee, income guarantee, deferred Sipp and unsecured personal pension options
Minimum investment: Lump sum £50,000
Investment choice: Eight secure capital funds, eight secure income funds, five managed portfolios, five index portfolios, six index funds and 39 externally managed best of breed funds, wider investment options through Sipp
Options: Deferred Sipp, unsecured personal pension
Charges: 0.4-0.55% a year for product wrapper, annual 0.55-1.6% for capital guarantee option depending on fund chosen, annual 0.5-1.75% for income guarantee option depending on fund chosen, annual 0.1-0.95 for other funds
Commission: Menu -based initial up to 6%, renewal up to 1%
Tel: 0845 370 6040
MetLife has designed a personal pension plan with the option to select a capital guarantee or income guarantee through a range of secured funds.
Discussing the best features of this product, Informed Choice director Martin Bamford says: “The fund range is good, but not extensive. There is a reasonable choice between active or passive funds and active or passive portfolios.”
He feels that the Morningstar fund selection process will make it easier for the adviser to justify the recommendation of particular funds. “The Sipp option allows access to more extensive investment choices, at an additional cost of course,” he adds.
The £50,000 minimum total transfer value is regarded by Bamford as reasonable, but he feels £100,000 would be more suitable. “The minimum regular contributions of at least £5,000 are off-putting as this would discourage investors from making more modest regular contributions which could still be valuable,” he says.
Bamford believes that the adding of notional units to support a bigger income is a clever concept. “This gets around Government Actuary’s Department limits when guaranteed income is higher than these levels. However, GAD limits exist for a reason and this strategy could, I assume, lead to capital erosion of the fund. Advisers recommending this option would need to fully explain any additional risks involved.”
He notes that it is possible to select automatic fund rebalancing, but with a retirement income product this complex, he thinks the adviser should be conducting at least an annual review.
Turning to the less attractive aspects, Bamford says: “The costs of the various guarantees are explicit, but only disclosed as part of the sales process, which makes it impossible to comment on this aspect of the product.”
Identifying the main competition Bamford says: “The Hartford, another US insurer attempting to muscle in on the UK market, is a competitor with Hartford platinum and its guaranteed income plan. Living time from AIG Life is another potential competitor.”
Summing up Bamford says: “MetLife is big in the US but relatively new to the UK. It has no solid IFA reputation in this country, which is something that takes years of hard work to build. Investors should have some reassurance by the financial strength of affiliate companies in the US.”
Suitability to market: Average
Investment choice: Average
Adviser remuneration: Average