Standard Life is expanding its range of retirement products, with a new guaranteed fixed-term income option.
This new product will be available to anyone aged 55 to 85, and offers the option of fixing income for any period from three to 25 years. The minimum purchase price, for what is effectively a short-term annuity, is £10,000.
The product will be available on the open market through advised and non-advised routes, including industry quote comparison portals and specialist annuity brokers.
Standard Life says this new product will offer certainty around income to those either approaching or in retirement, but offers more flexibility than a traditional annuity, giving people the option to adapt their plans once the fixed term comes to an end.
It adds that this new launch comes in response to growing awareness among advisers and pensions savers of the benefits of blending drawdown and annuity products.
It is also designed to be used by pension savers who have stopped work but are looking to bridge the income gap before their state pension kicks in. Recent research by Standard Life found that almost half of people (46 per cent) expect to transition gradually into retirement.
Key features of the product include the ability to add additional options to help shape how people take their guaranteed income. This includes a maturity value, which allows a customer to choose an amount that will be received at the end of the fixed term, which they can either take as a lump sum or put towards another retirement income product. The lump sum can be chosen at outset or calculated based on the level of income and the term selected.
Additional options include death benefits and the option to increase income annually, either in line with the Limited Price Index, Retail Price Index, or a predetermined fixed percentage, protecting the purchasing power of the income over time.
This launch follows Standard Life’s decision to re-enter the annuity market last year, the first provider to do so since 2015.
Standard Life managing director for individual retirement Claire Altman says: “The road to and through retirement is different for everyone but the vast majority of people want both certainty and flexibility.
“As many as nine in 10 people say income certainty in retirement is important to them, while the same proportion say it’s important to access all or some of their money flexibly. For these customers, the Standard Life Guaranteed Fixed-term Income does what it says on the tin – providing a guaranteed income for a fixed-term, as well as the flexibility to reassess their financial needs at a later stage.”
Altman adds: “There is increasing awareness around how blended retirement income solutions can often better meet peoples’ needs in retirement and the industry is responding with innovation happening across the retirement income market. Having an element of guaranteed income is an important part of this mix, and this launch demonstrates our commitment to developing products that will help make the best use of people’s hard-earned retirement savings.”
This product is manufactured by Phoenix Life and distributed under the Standard Life brand.