MetLife has launched a flexible guaranteed drawdown product utilising funds from Fidelity Worldwide Investment and BlackRock.
Its Retirement Portfolio and Secure Income Option, launched today, combine drawdown investing with a lifelong guaranteed level of income.
The provider said a £250,000 investment by a 65-year-old would face all-inclusive charges of 1.65%. The same fund could attract a 4% guaranteed income equating to £10,000 a year.
Since April over-55s have had complete access to their defined contribution pensions, subject to normal rates of tax.
The number of people opting for income drawdown has increased significantly since the reforms were introduced. However, MetLife said client research showed a clear appetite for guaranteed income in retirement.
MetLife said its new offering would suit people with a low capacity for loss and relatively cautious attitude to risk.
MetLife wealth management director Simon Massey said customers who used the product would not face the prospect of running out of money in retirement.
"Any customer who went into drawdown at the wrong time, maybe they would have traditionally annuitised but didn't because of pensions freedom, could potentially be sitting on a 20% reduction in their fund if you take into account market falls, adviser charges, year one income.
"They are just six months into their retirement - that makes for a very nervous customer, a very nervous retirement and potentially some phones ringing in adviser's offices.
"Do not get me wrong, there are some clients who have got substantial wealth, they get it and can ride out peaks and troughs. We are not talking about that segment of clients.
"We are talking about people with between £100,000 and £500,000 and that's all they have got. Those are the types of clients who will be thinking ‘I am nervous now'."
MetLife said it developed the product after both consumer and adviser research.
Sterling & Law IFA consultant Laurence Sanderson said: "Certainty of income is important to clients. We have had strong interest from clients who have been concerned about how much income they would have in retirement."
Massey (pictured) added the product offered flexible access to lump sums with no additional administration costs.
He added costs "compared favourably" with standard drawdown.
"We are price comparable. We are not suggesting we are the cheapest as we are offering an enhanced benefit of an income for life."
MetLife said the Retirement Portfolio offers daily lock-ins and a deferral rate of 5%. The Secure Income Option allows retirees to stop and start their income as needed.
Customers are able to choose from a range of investments to build a personalised retirement plan.
BlackRock will run the equity portfolio used by the product while Fidelity will run the fixed income side.
It comes after provider Aegon launched a platform-based drawdown with guarantees option in July this year.
Zurich is also planning to launch a drawdown product that allows clients to convert assets into an income for life at a chosen point in retirement.
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