US financial services giant MetLife plans to take on the UK market in January with a guaranteed income retirement product.
It will aim at the increasingly competitive market for people who do not want to buy an annuity but are not prepared to take the risk of income drawdown.
The funds will be invested in around 20 different managers, including Invesco Perpetual, Fidelity and Schroder. Minimum investment is £50,000. The plan guarantees to pay 100 per cent of the initial sum invested and any gains the fund has made every three years.
Investors pay a 3.6 per cent AMC for the aggressive managed fund and 2.5 per cent for the defensive managed fund.
Chief operating officer Paul Shallis claims that no other firm offers this type of guarantee.
MetLife, which has total assets of around $500bn, has set up an office in Canary Wharf in London’s Docklands with 50 staff.
Shallis refuses to discuss whether the company has any acquisition plans but says it will be launching other pension and investment products, including onshore and offshore investment bonds.
He says: “This guaranteed product will fill the void between annuities and income drawdown. Nobody else offers these types of guarantees in a pension wrapper.”
Buckles Investment Services chief executive Nigel Speirs says: “This sounds like good marketing. My view is that these kind of guarantees will always come at a cost. If the cost of the guarantee sacrifices performance, then I question whether we would do it.”