Canada Life are the latest pension company to throw their chips into the retirement market poker game. Traditional they haven’t been overly active in the at-retirement market with annuities being their main source of business. However, they have now announced a trio of products to meet the expected demand. As with other providers they are to offer Flexi-access drawdown which keeps pension funds invested and allows flexible withdrawals.
In additional they are a type of fixed term annuity as well as a single consolidated solution. To be named ‘The Pension Investment Plan’, it’s going to be aimed at those who wish to consolidate a number of pension into one solution. This will allow ad-hoc withdrawal through the Uncrystalised Funds Pension Lump Sums (UFPLS) method.
The fixed term annuity is a half-way-house between an annuity and income drawdown. It provides a fixed income for a fixed term (up to 40 years), with a guaranteed maturity amount at the end (subject to funds being left). It’s not an investment and therefore has no investment risk, rather an interest rate is applied at the start based on the selected term and stated withdrawal amount. This will allow holders of the plan a second bite at the cherry in terms of choosing another solution on maturity.
Charges for the three options have yet to be announced at time of writing but the added competition can only be a good thing for those reaching retirement.
In changes to their flagship annuity offering, they are to offer a guaranteed period of up to 30 years. This follows the Chancellors announcement to offer more protection to those who still wish to buy a guaranteed lifetime income in the form of an annuity.