LV= launches enhanced with profit pension annuity

Flexible retirement solutions specialist LV= has launched a market leading Enhanced With Profit Pension Annuity, which also can accept protected rights and allow customers to choose value protection. In future, advisers will not only be able to offer an additional investment choice to consumers purchasing an annuity, but also higher levels of income in retirement.

The new product, one of only two Enhanced With Profit Pension Annuities available on the market accommodates protected rights, and annuitants will be offered value protection - thereby providing a return of unused capital to their estate should they die before the age of 75.

As with the conventional enhanced annuity provided by LV=, advisers will be able to obtain higher levels of income for customers who smoke or suffer from certain medical conditions, enabling their clients to receive a more appropriate rate based on personal circumstances. Policyholders will also receive an income linked to the performance of the LV= With Profit fund, providing them with the potential to receive additional income not possible under a conventional annuity.

Features of the new Enhanced With Profit Pension Annuity include:

Up to 25% more income than a standard With Profit Annuity.
Rates depend on medical conditions and lifestyle issues.
More than 1,400 medical conditions and lifestyle issues covered, including diabetes and smoking.
Income guaranteed not to fall below the level applicable for a 0% Anticipated Bonus Rate (ABR) annuity.
Full or partial Value Protection available on all annuities
Protected Rights annuities accepted on 0% ABR basis
Full range of flexible commission options available

Matt Trott, Head of Annuities at LV=, commented: "A 60-year-old male smoker has a life expectancy of over 15 years. For this investment term, many people would consider it inappropriate to invest the whole of a pension fund in a vehicle backed wholly by fixed interest securities. For these people, a With Profit pension annuity allows customers the potential of benefiting from increased returns available from stockmarket investments, whilst guaranteeing a base level of income."

"At the same time, LV= recognises that a smoker may not live as long as someone in good health, and are prepared to reflect this in the rates we offer. LV= strongly believes that customers should be entitled to a fair income in retirement based on their own personal circumstances, and offering an enhanced with profits annuity allows us to do this."

Trott concludes: "We have developed a unique proposition in this market, where customers can link their annuity income to the investment performance of a respected mutual, and still obtain rates appropriate to their personal circumstances. In addition, customers can now opt to protect the value of their With-Profit annuity should they die before reaching age 75."