Retirement specialist LV= today confirms it is offering a flexible drawdown option under its Protected Retirement Plan (PRP). Via this option, qualifying new and existing clients will be able to:
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Select an income unrestricted by GAD rates, provided it is sustainable over the term of the plan
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Select a nil maturity value option, allowing customers access to their full pension fund over a three year period.
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Take a ‘guaranteed maturity value' at the end of the term as a one-off income payment
John Perks, LV= retirement solutions director said: "The age 75 changes have allowed us to offer a wider range of solutions to meet the needs of our customers. In particular, the new flexible drawdown option available under PRP provides a valuable income and death benefit planning vehicle."
"We are pleased to be able to offer our flexible drawdown facility to existing as well as new PRP customers. This means that eligible customers will not be affected by falling GAD maxima, and will give them and their dependants more options when the plan ends."
The Protected Retirement Plan from LV= provides customers with a fixed income for a fixed term with a guaranteed maturity value at the end of the term. The minimum investment for a PRP is £10,000, and the minimum term is three years. Also in order to qualify for flexible drawdown, customers must confirm they will receive a lifetime income equal to the minimum income requirement.
Under the flexible drawdown option, customers' income is not restricted to GAD limits. This means that they only need to vest the amount of their pension fund needed to meet their income needs. As the remainder of the customer's fund can be left unvested, it can be paid out as a tax free lump sum on death before age 75, avoiding the 55% tax normally applied on drawdown pension death benefits.
John Perks added: "Even after the age of 75, the tax position on lump sum death benefits can be advantageous using flexible drawdown. By advising eligible dependants to elect for flexible drawdown they can draw the lump sum death benefit as a one-off income payment, and reduce the 55% tax that would otherwise be payable.
"LV= is able to get new products to the market quickly and efficiently and is committed to offering solutions that meet people's changing needs in the changing pensions landscape. We recently confirmed our capped drawdown offering and we are one of only a handful of providers to be ready with a product that can access some of the flexibility of the new regulations that come into force today. We have also launched a website to help advisers through the new regulations at www.lv.com/weareready.
"We have also recently shown our commitment to flexibility by making advisers aware of the potential benefits of a member nominated review prior to 6 April - including waiving our charges for this, and offering clients the best GAD rate to suit their individual circumstances while new or current GAD tables can be used. All of this combined helps advisers offer greater choice and support to their clients."
Other changes that LV= has made as a result of the Age 75 legislation changes include:
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Removing the maximum age 75 limit from all its enhanced and with-profits pension annuities
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Extending the value protection cover under all its annuities beyond age 75
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