In response to the changing needs of pensioners, Aviva has launched a fixed-term retirement plan that doesn’t lock customers in for life.
The new retirement income plan lets savers withdraw tax-free cash if they choose so, with the option of selecting an income, or both from their pension pot.
The scheme offers two investment options, both offering guaranteed value on maturity of the plan. Depending on the investment options they choose, customers can stay invested for a minimum period of five years and maximum period of 10 years.
During the investment period, customers can’t withdraw cash, and on maturity the money can be used to buy into another pension product. This allows customers to reassess their financial requirements at the time of maturity.
The new scheme will be suitable for individuals who are approaching retirement and plans to work beyond the conventional retirement age since the fixed-retirement plan helps in meeting the changed situation and offers a “more flexible” alternative to traditional lifetime annuity.
“By investing for a fixed period of time, customers know they will have the chance to reconsider their financial needs and requirements in the future, and make a further decision on how to best use their pension fund at that point”, said Clive Bolton, retirement director at Aviva.
“It’s a happy medium that’s suitable for those who want some flexibility, as well as an element of certainty”, Bolton explained.
Commenting on the dynamic nature of the retirement marketplace, he said: “we know through our customer research and regular Real Retirement Reports that the retirement market is changing rapidly”.
“We’re responding to these changes by expanding our range of retirement solutions, offering increased choice and flexibility to customers”, he concluded.