Aegon has designed a new retirement plan that guarantees 5% of invested capital as an annual income for life for those aged 60 or more. Dubbed '5 for life', the product offers the added benefit of allowing the investor easy access to the remaining capital at any time if needed.
The product, which is run through the Dublin-based Aegon Scottish Equitable International business, provides some scope for investment growth and this can be locked in at certain times to offer a higher level of guaranteed income. It also offers a death benefit of 100.1% of the cash-in value or the original premium less any withdrawals.
"This product is based on the feedback of clients looking for constant income - an idea that has been successful in the US for some time," said Steven Whalley, head of marketing at Aegon Scottish Equitable International.
Investors have the choice of four funds, overseen by Aegon Asset Management and Merrill Lynch Investment Management, with varying degrees of exposure to equities and fixed interest. Prospect is 60% invested in equities and 40% in bonds, Vantage is split 50-50, and Vista is 40% equity and 60% bonds. Horizon, which has a higher-risk 70% equity and 30% bonds weighting, offers a reduced guaranteed income of 4.5% rather than 5%.
The annual management charge varies by fund, between 1.55% and 2.25% and there is also an establishment charge to cover set-up costs, which can be taken over five or eight years. If advisers take the full 6.75% initial commission, this fee is 1.5% a year over five years and 1% over eight.
There is a 3% commission option that reduces the establishment fees to 0.9% over five years and 0.6% over eight while a launch offer gives 1% additional allocation for investments over £50,000.
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