Spire Platform Solutions has teamed up with Novia Financial, the investment adviser wrap platform, and Just Group to bring to market a truly innovative guaranteed lifetime income product for the retirement market: Secure Lifetime Income.
The annuity is like a traditional annuity, in the sense that the income is guaranteed for life and the amount of income depends on the health of the annuitant.
But it differs in three important ways:
• It pays income for life alongside other self-invested personal pension investments;
• The death benefit is determined by a simple formula; and
• There is a surrender value.
A traditional annuity is purchased as a standalone policy, but the SLI pays lifetime income within a Sipp.
It is designed to be purchased by a relatively small proportion of the value of the Sipp, which means the rest of the Sipp can remain invested in the normal way and additional income can be paid by way of drawdown.
This allows advisers to arrange blended solutions of annuities and drawdown on one Sipp platform.
This is particularly useful, as it makes it easier to purchase annuities in slices in order to take advantage of the increased benefit from mortality cross-subsidy as people get older.
The SLI will take health into consideration, so the annuity will be enhanced for certain conditions.
By design, and to keep the cost of providing the income to an absolute minimum, the options are limited because it is only available as a single life with level payments.
It is early days for the new platform annuity, but I hope other platforms and providers embrace this concept.
Annuities are still important and relevant, but in the post-pension freedom world they need to be used and accessed differently, and making them available on Sipp platforms means annuities can be thought of as a new asset class.
Billy Burrows is retirement director at Better Retirement
