fixed-term annuity – LV Launches new product

LV= has entered the fixed-term annuity market with the launch of its Protected Retirement Plan.

The product has been designed for retirees who want a secure fixed income for a limited time, before making a decision on their lifetime retirement income options, LV= says.

The Protected Retirement Plan (PRP) offers fixed terms of between three and 25 years, falling to 20 years after 6 April 2010.

Retirees will receive a fixed income, subject to GAD limits, with a guaranteed maturity value, which they can then re-invest in a lifetime annuity at a later date. Income options are flexible and the plan uses unsecured pension rules to offer flexibility for investors.

LV= has also launched a trustee investment plan, which combines the PRP’s guarantees with the investment options available in a SIPP.

The product suits healthy lives that may become enhanced at a later date. In simple terms you buy a fixed term annuity with a guaranteed maturity fund and a fixed term. At the end of the fixed term you can then either annuitise fully or purchased another fixed term annuity.

New National Employment Savings Trust

  • The scheme will be focused on low-to-moderate earners who don’t currently participate in a workplace pension scheme, with an annual contribution limit of £3,600 at 2005 levels.Employers can use NEST (National Employment Savings Trust) in different ways, but in most cases there will be headroom under the limit for employers and/or members to contribute more than the minimum and to structure their contributions in different ways.For example:
    • where an employer makes contributions on the minimum band of earnings required by the Pensions Act 2008, an 8 per cent contribution for an average earner (approx £25,100) would be approximately £1,600 per annum
    • alternatively, an employer might choose to make contributions on a broader band of earnings, for example by basing them on the first pound of pay. In this case an 8 per cent contribution for an average earner (approx £25,100) would be approximately £2,000 per annum
  • Transfers in and out of the scheme are banned (except in some special circumstances, such as annuity purchase at retirement).
  • The scheme provides a portable and flexible option for members who change jobs frequently (where their different employers choose NEST to meet their auto-enrolment duties).
  • The scheme will be open to any employer of any size or sector that wishes to use it to fulfil their auto-enrolment duties.