LV= launches low-cost online-only pensions advice service
The retirement income market is hotting up with the launch of a highly-competitive online advice service from LV=, costing as little as £199.
Customers will be able to access the insurer's qualified financial advisers during the process, who can recommend income solutions "from across the market" for people ready to convert their pension into an income.
Customers can access an "online income shaping tool" for free, that will generate a report spelling out the products on the market and their pros and cons.
From that point, customers can choose between two price levels. For £199 they can access a detailed "personalised regulated advice recommendation on the most suitable products for them". LV= says this could include buying an annuity, using income drawdown, deferring taking action, or a blend of different income solutions. It includes a discussion with a financial adviser to talk through the recommendations.
For a further £499 LV= will also complete all the required paperwork, contact existing pension providers and organise the payment of any tax-free cash.
Accessible and cost-effective
The service, called Clear Online Retirement Advice (CORA), aims to make advice "more accessible and cost effective", clearly aimed at people who might not feel the government's free Pension Wise guidance service goes far enough – but who might not wish to pay the sometimes hefty fees charged by independent financial advisers.
Richard Rowney, managing director of LV= Life and Pension, said: "Financial advice helps pension savers make the most of their funds. However, we recognise that there are many retirees who do not plan to see an adviser before they access their pension.
"To ensure that middle Britons approaching retirement do not miss out we have changed how advice is offered. CORA has been designed to help demonstrate the value of advice to those who would not typically seek it.
"By making the advice available online it means that pension savers can access valuable information from the comfort of their homes, whenever it suits them, safe in the knowledge that our expert advisers are on hand to help.
"Making those approaching retirement aware of the choices the pension freedoms afford them will ensure that they make an informed decision about how they take an income from their pension. For some an annuity will remain the best option for them, for others it will be drawdown, however many could benefit from mixing and matching solutions to achieve the level of income and flexibility they want in retirement."
The service is available at lv.com/clear-retirement-choices.
An alternative to an annuity, income drawdown (also known as an unsecured pension) allows you to take income from your pension fund while the fund remains invested and so continues to benefit from any fund growth. The drawdown of income has to be calculated carefully as taking too much income could exhaust the pension fund so experts say the annual drawdown must not exceed what the assets would normally yield in an average year. The invested pension fund could also be hit by market turbulence and the value of the assets could fall.
In exchange for any lump sum – usually your pension fund – an annuity is “bought” from an insurance company and provides an income for life. When you die, the income stops. Annuity rates fluctuate daily and depend on your sex (although from 21 December 2012 insurers will no longer be able to use gender as a factor when calculating annuities), age, health and a number of other factors, so you have to pick the right one and, once bought, its terms cannot be altered, so seek financial advice.