Research from AXA Wealth1 reinforces what many financial advisers intuitively know: people want the nirvana of a lasting guaranteed level of income with the potential for income growth. As the market starts to open up to new retirement solutions, increased demand for unit-linked guarantees has meant that AXA Wealth will offer this unique product as part of its soon to be launched reform-ready retirement portfolio service.
With Secure Advantage+, customers can choose optional features to benefit from a minimum guaranteed income for life that can be turned off and on as needed, they also have the ability to take more income at the beginning of retirement, when they may be more active. To help investors mitigate the effects of market volatility, investors can select different investment strategies according to their attitude to risk and potentially benefit from volatility protection built into the underlying funds.
Unit-linked guarantees are coming of age. While they may have been more niche in the past, the new pension reforms will open up many new retirement planning opportunities for these types of flexible products. By offering our advisers and their customers access to Secure Advantage+, we are giving people the security of an annuity, but with all the flexibility and benefits of income drawdown. Plus the added advantage of a tried and tested product in the market place.
Secure Advantage+ holders also have the option of adding on a death benefit to their plan, which gives named beneficiaries the full value of their drawdown plan, minus any withdrawals taken over the policyholder’s lifetime.
We believe the market for unit-linked guarantees will grow significantly in the UK from April 2015 onwards, as people seek to take advantage of the flexibility which the pension reforms afford, while continuing to seek the security of a minimum level of income in retirement. Investors worldwide face the same challenges of longevity, inflation and volatility. The old days of a one size fits all solution are well and truly over for both advisers and their clients. New sophisticated approaches focused on combining different solutions to best suit investors’ individual needs can only result in better outcomes in retirement.