Currently it pays an average of 6.5 per cent a year for 60 – 65 year olds who have smoked a minimum of 10 cigarettes a day for at least 10 years. The rate for older ages could be significantly more.
The product was launched at the request of IFAs and their clients who invested in the firm’s retirement annuity for smokers earlier this year, according to Philip Brown, head of retirement and care product development at Partnership.
Unlike the existing product, that can only be bought with the proceeds of an authorised pension scheme, the Purchased Life Annuity is available to anyone with a lump sum to invest for income.
Brown adds that products that guarantee income are more appropriate than ever in a world of volatile investment markets. “As interest rates are projected to fall, it is clearly worth considering products such as this Purchased Life Annuity since it provides a guaranteed rate of return for life. Plus, if you are concerned about inflation, payments can be escalated or linked to RPI,” he says.
The product launched on Monday and has been in the planning stage since February.