If ever there was a time for innovation in the annuity market it is now. With many people experiencing more complex patterns of retirement that require more flexibility and control, the traditional annuity is not meeting all the needs of today’s pensioners.
One interesting development may be ‘portfolio annuities’. That is, annuities invested in more than one policy. One example of this is the so called 80/20 annuity where 80 per cent is a guaranteed annuity and 20 per cent is an investment-linked option.
This combination of policies provides the client with a core guaranteed income with a small element that provides potential for future income growth and flexibility. Twenty per cent invested in a with profits annuity will only provide limited flexibility but it is a positive step in the right direction.
Billy Burrows is head of business development at Annuity Line
