Retirement specialist LV= has today announced the launch of its Pension Income Plus Annuity (PIPA).
PIPA, an investment linked lifetime annuity, gives clients the opportunity to have a high level of initial income, with the protection of a minimum income guarantee. Annuity rates are available on standard and enhanced terms, with around 1,400 medical conditions qualifying for enhanced rates of up to 20%.
Clients can select an assumed investment return (AIR) of between 0-4% at the outset which determines their starting income and, along with investment returns, how their income will vary each year.
Clients are protected from falls in investment returns by a minimum income guarantee. This is set at the 0% AIR income level and will never decrease.
In the event of an improvement in investment yields, the guaranteed minimum income (GMI) increases, and locks in a proportion of the investment returns received. The GMI will then rise by half of the percentage increase in income received above its previous highest level.
Clients are also protected by a unique guarantee that ensures the starting level of income will not reduce during the first two years of the policy, regardless of the AIR selected. After this period, clients can vary their AIR and have the option to convert to a non-investment linked conventional annuity at any time[1].
Investment returns applied to the annuity each year, and PIPA clients are also eligible for LV='s mutual bonus.[2]
Matt Trott, LV= Head of Annuities said: "Investment-linked annuities are increasingly popular in the UK market, with advisers and clients alike looking for more flexible and cost effective alternative solutions to standard lifetime annuities. Linking an annuity to an investment allows the fund to continue to participate in possible growth, while the GMI provides a secure lifetime income.
"The launch of our new annuity offers a simpler structure than traditional with-profits annuities and includes comprehensive features such as enhanced terms, value protection and competitive starting incomes.
"The new PIPA plan fits well into the existing range of LV= retirement solutions products. We already offer an enhanced annuity for clients looking for a fixed income. For those looking for a bit more flexibility, our fixed term annuity (the protected retirement plan) or PIPA provides another choice before drawdown becomes appropriate."
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