The Hartford launches guaranteed income drawdown

Hartford Platinum fills consumers’ desire for the security of an annuity and the flexibility of income drawdown.

Retirees in the United Kingdom have historically had two choices when turning their retirement savings into income: putting their cash into a secure but lower paying annuity or opting for an income-drawdown plan with equity returns that are subject to market risk.

Hartford Life Limited, a subsidiary of The Hartford Financial Services Group, Inc. (NYSE: HIG) is ending this status-quo by introducing a ground-breaking pension plan that allows investors to have the best elements of both traditional options but without the disadvantages of either. The new pension plan, Hartford Platinum, can be used to accumulate assets as well as to generate an income for retirement.

Hartford Platinum includes an optional feature called the Guaranteed Retirement Income Plan (GRIP), which allows retirees to draw a minimum guaranteed income for the rest of their lives. The GRIP also gives retirees the potential to grow their pension income by investing retirement assets in a range of leading of investment funds, guaranteeing its value and potentially locking-in up to 10 percent of investment gains each year. The guarantee of a minimum retirement income for life, coupled with the ability to lock-in investment gains within a pension, is a first for the UK market.

“The Hartford is meeting the needs of consumers in the post A-Day pension reform world. For some, annuities restrict flexibility and options in the way people want to retire, and for others income drawdown carries too much risk for money they can’t afford to loose,” said John Enos, Managing Director, Marketing and Distribution for Hartford Life Limited. “Hartford Platinum meets an unfulfilled gap in the market, offering security, through income for life, and the real potential for growth.”

A recent study sponsored by Hartford Life Limited in January 2007 found that three quarters of respondents wanted a guaranteed pension income with the potential to grow over time. Three in five wanted a guaranteed pension with the potential to keep up with inflation and another 15 percent wanted both guarantees and the ability for retirement income to keep up with the investment markets. Nearly 55 percent said they would be willing to consider such a plan for their retirement income.

Billy Burrows, Managing Director of WBA Ltd, an independent financial adviser firm, added: “As a result of demographic pressure and regulatory change, the pensions world is evolving. What we’re seeing is the development of a ‘third-way’ for pensions, products that give the certainty we associate with annuities, but with the potential for fund and income growth, similar to drawdown plans. I believe that this will become increasingly attractive to people nearing retirement and that, for financial advisers, offering advice on these products will become as commonplace as advising on annuities.”

Hartford Platinum allows individuals to invest their retirement savings, with help from their financial adviser, within up to 85 available investment funds. They can also select from a number of pre-built portfolios created with Ibbotson Associates, the asset allocation experts. The plan’s underlying funds were selected in conjunction with Old Broad Street Research, and include leading providers such as: Artemis, BlackRock, Gartmore, Fidelity, HIMCO, Invesco Perpetual, Investec, JP Morgan, Jupiter, Morley, BGI, New Star and Schroders.

“Hartford Platinum’s death benefit allows retirees to pass their lifetime savings to their loved ones should the pension plan owner die after only a few years of retirement. This is a key concern for many people in deciding between available pension plans,” Enos said. “The Hartford has been providing similar types of plans in the United States for many years, and we believe that the product is really going to resonate with independent financial advisers and meet the retirement needs of their clients.”