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Offshore white-label deal set to boost annuities

Three major product providers are set to offer offshore annuity products that give control over investment and return of fund on death through a tie-up with annuity firm Open Annuity.

Open Annuity is in advanced negotiations with three providers to white-label its London & Colonial Gibraltar-based product, previously marketed through Challenger, for a launch in the New Year.

The firm believes a link with a strong provider brand will transform perception of the product from a niche high-risk annuity to a mainstream retirement and inheritance tax planning tool.

The product has been created by Open Annuity chief executive Ken Wrench and chairman Robin Ellison. It gets round the loss of fund on death seen with conventional annuities by giving each annuitant a share in a life company which passes to the estate on death.

Investors will be expected to maintain a proportion, possibly 50 per cent, of the fund&#39s assets held by the parent product provider.

Minimum fund size will be £250,000 but phase two of the roll-out of the possible product is planned with a £100,000 minimum fund value product made safer by a proportion of investment required in fixed interest.

Open Annuity chief executive Ken Wrench says: “The Open Annuity in its present form is a relatively unknown product from an unknown company based in a jurisdiction where many people have not done business before. With the comfort of a strong brand, we hope that many more people will be able to keep control of their assets past the date of annuity purchase and be able to pass on their fund at death.”

The Bureaux managing director Peter Quinton says: “If Open Annuity can get a decent brand name attached, then I think the product will sell but selling to people with smaller fund values carries mortality risks as, without the security of a conventional annuity, there is always a chance of running out of money if you live for a long time.”

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