Question: Unit Linked Guarantees are simply third way Annuities. How do ‘ULG's' really compare to general annuities and Income Drawdown?
Colin Bell - Aegon
Yes, unit-linked guarantees are known by a number of alternative names which can be confusing. I think unit-linked guarantees is the most self-explanatory name - guarantees on familiar unit-linked products that advisers have been using for many years. The underlying unit-linked products may be offshore or onshore investment bonds (for non-pension money) or phased / drawdown / trustee investment in the pension space.
ULGs provide a very useful halfway house between fixed annuities and income drawdown for the rapidly increasing numbers of risk-averse individuals approaching retirement with defined contribution pension pots. They give the flexibility, growth potential and access to lump sum legacy benefits of drawdown but with the reassurance and peace of mind of annuities. There is an additional guarantee charge, which means that projections will never be as big as for drawdown, but I would argue that this is a small price to pay for all the benefits over traditional retirement solutions.
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