Prudential announces boost for income choice annuity awards
Prudential has announced that, at a time when rates on conventional annuities have been falling, Prudentialís innovative Income Choice Annuity is bucking the trend with starting incomes being increased by 1.5 per cent.
Prudential has passed on a fall in guarantee costs for the product which offers a secure minimum income for life as well as giving customers the opportunity to benefit from potential growth.
The new pricing applies to quotes issued from 11th October and to all new business where funds have been received from 11th October.
Prudential was able to increase starting costs after a calming of market volatility and a review of risk-free rates meant the cost of providing guarantees behind the Income Choice Annuity had fallen.
More than 12,000 customers have bought Prudentialís Income Choice Annuity since it was launched in March 2009. This innovative annuity gives customers the flexibility to select the level of income they wish to receive, and customers starting their annuity between 6 April 2009 and 5 April 2010 will have seen their income grow by up to 6 per cent at their policy anniversary.
Vince Smith-Hughes, head of pensions development at Prudential, said: "The cost of providing the guarantees underpinning our Income Choice Annuity has fallen so we are able to pass that on to customers.
ďThe Income Choice Annuity has proven to be very popular with clients and advisers since launch and we are committed to ensuring it remains as competitive as possible in the current market.Ē
Income Choice annuities are available to customers with £10,000 after tax-free cash has been taken and is backed by Prudentialís with-profits funds, one of the strongest funds in the UK, with around £70 billion invested.
Initial commission can be either a fixed amount or a percentage of the fund value after tax-free cash, up to a maximum of 3.5 per cent of funds invested or, if higher, up to £500.
The annual commission, up to a maximum of 0.5 per cent of the original fund after tax-free cash has been taken, is a level amount payable annually starting in the first year until the death of the last survivor on the policy.
The initial charge is £475, plus 0.6 per cent, plus charges to cover the cost of commission, and the annual charge is expected to be 1.33 per cent a year assuming investment returns in the with-profits fund are 7 per cent a year.
Notes to Editors:
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