Standard Life has launched a new annuity option, after higher rates have increased demand for these guaranteed income products.
This launch comes after Standard Life’s research showed that certainty of income in retirement was important to more than three out of four (78 per cent) savers, with more than half (58 per cent) of respondents saying they worry about running out of money in the future.
The new pension annuity is fully medically underwritten, giving higher rates to those with existing health problems. Customers can choose between a number of income options, which include inflation-linked payments and death benefits – which will pay a capital sum to beneficiaries on death. There is also the option to guarantee a payment period for up to 30 years which can ensure an income stream is paid to a spouse or other beneficiary.
The annuity is available to savers aged 55 to 75, whether they have a pension with Standard Life or are buying through the open market, via either advised and non-advised routes.
Standard Life managing director for individual retirement Claire Altman says: “Annuities are increasingly better value, with current rates improving by 20 per cent in the last twelve months, as of June 2023.
“In an uncertain economic climate, in which three quarters of people say they want income certainty in retirement, the guaranteed income offered by an annuity is likely to be an ideal solution for many. I think people are beginning to see this value, with the first quarter of this year proving to be the highest quarter for annuity sales since the pension freedoms.”
Altman adds: “When purchasing an annuity, it is important to be aware that they come with many different options, or benefits, which can be used to shape the income you receive. It is worth considering whether benefits such as value protection or a guaranteed period would provide further peace of mind.
“Through enhanced annuities, the income you can receive is also increased as a result of any medical conditions you may have, so it pays to provide a full health disclosure when looking at the best options available on the market.”
The Standard Life Pension Annuity, which is manufactured by Phoenix Group and distributed under the Standard Life brand, has been launched amid growing awareness around how blended retirement income solutions can offer the best of both worlds – security and flexibility.
Altman says: “Retirement income doesn’t have to be a binary choice between drawdown and annuities. Two thirds (68 per cent) of people say they would like a guaranteed income to meet their essential expenses, together with some income remaining flexible for non-fixed expenditures.
“By purchasing an annuity in combination with other solutions, such as drawdown, we can meet this desire for potential flexibility and certainty, allowing people to enjoy the best of both worlds. Purchasing later in retirement, or in stages, also allows someone to benefit from the way that annuity rates generally improve with age.”
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