Guaranteed products – an essential TCF component

In the continuing unpredictable economic climate, guarantees around retirement income are becoming increasingly popular with advisers and clients alike.

And with Treating Customers Fairly (TCF) guidelines placing additional emphasis on identifying and considering the needs of specific customer circumstances, the particular benefits of guaranteed products may be an ideal solution for many clients. It's therefore an essential part of any discussion with these clients.

The raft of customer research on unit-linked retirement products backs this up. Here's just a snapshot of some recent findings from both Defaqto and AEGON:

  • 50% of clients want at least 75% of their income from guaranteed sources.*
  • 52.5% said they'd consider paying a premium to insure their retirement income against the effects of stock market volatility.**
  • Nearly half of those people said 0.5% to 1.5% of their retirement pot each year would be a fair price to pay to make sure their income never fell, never ran out and had the potential to increase over time.**

It's clear that people are not only looking for guarantees – they're also prepared to pay for them. But this is not a new concept. Insurance is something that's part of our everyday culture, from homes to pets, and people are willing to pay.

The market

So what's been causing this growth in demand? The answer is that there's a new generation of people retiring, and there's a new way of doing it.

Life expectancy is much higher, with people often enjoying retirement of up to 30 years or more. This generation has higher aspirations, they want to do more with their lives and they certainly don't want to end up relying on the state. It's precisely for these reasons that you can't ignore the increased choice, flexibility and security offered by guaranteed products.

And guarantees become an essential part of any discussion if your factfind identifies that your clients:

  • have cash on deposit seeking a higher rate of return without the investment risk
  • want to build a retirement pot with the security of knowing the minimum level of return
  • are looking for a money-back guarantee on death without the worry of their investment dropping (other than any income already taken)
  • want regular income that may grow but won't go down
  • are looking to make the most of stock market growth
  • want to reduce their inheritance tax bill

(Please note: this isn't an exhaustive list)

No one is saying that guaranteed products are the cure-all for retirement planning. However, they do offer something that just can't be obtained from the traditional options. And when you put TCF in the mix, they certainly should be discussed as an option.

The only circumstance in which the guarantees wouldn't apply is if Scottish Equitable plc failed. In this unlikely event, the benefits from the plan may be affected.

This communication is for professional financial advisers only. It isn't for private customers and shouldn't be given out, to or relied on by, them.

Guaranteed income – our range of solutions

See the range of guaranteed products available from AEGON.

Guaranteed income – for life*

AEGON Secure Lifetime Income from AEGON Ireland plc is an offshore investment plan that allows a lump sum investment in return for a guaranteed income for life from age 60. It offers:

  • tax-free income that won't go down but could go up if investments do well
  • a money-back guarantee on death
  • access to capital at any time and for any reason

Available on a single life basis for individuals aged 45 to 79 who want to invest between £15,000 and £1 million.

Visit www.aegon.co.uk/where-safe-meets-secure to find out more

* The income

Guaranteed income – for 20 years

Investment Control from Scottish Equitable plc is a tax-efficient and flexible onshore bond that offers the benefit of an income guarantee option for real peace of mind. It offers:

  • 5% income for 20 years, or less for longer if your clients prefer
  • a guaranteed death benefit
  • a guaranteed benefit to lock in any potential growth on the bond

Available for up to four people, a company or trustees of a trust, the bond can continue until the death of the last person covered. Minimum investment of £5,000 with no maximum.

Visit www.aegon.co.uk/where-safe-meets-secure to find out more

Guaranteed pension income – for life

Income for Life from Scottish Equitable plc is a flexible pension product that combines the guaranteed income of an annuity with the death benefits and opportunity for investment growth of an unsecured pension. It offers:

  • a guaranteed income for life (taxable)
  • income that won't go down due to investment performance but could go up if investments do well
  • variable options to access maximum income

Available on a single or joint life basis for individuals aged 55 to 70 who want to invest between £50,000 and £1 million.

Visit www.aegon.co.uk/where-safe-meets-secure to find out more

* Defaqto third way guide, 2010
**AEGON At Retirement Report, October 2009
The only circumstance in which the guarantees wouldn't apply is if AEGON Ireland plc, or AEGON Scottish Equitable plc, failed. In this unlikely event, the benefits from your clients plans may be affected..
AEGON is a brand name used by both Scottish Equitable plc and AEGON Ireland plc. Although they both trade as AEGON, we refer to Scottish Equitable plc and AEGON Ireland plc in this document where we need to for clarity.
AEGON is a brand name of Scottish Equitable plc. Scottish Equitable plc, registered office: Edinburgh Park, Edinburgh EH12 9SE. Registered in Scotland (no. 144517). Authorised and regulated by the Financial Services Authority. An AEGON company. www.aegon.co.uk. AEGON is a brand name of AEGON Ireland plc. AEGON Ireland plc, registered office: 2nd Floor, IFSC House, Custom House Quay, Dublin 1, Ireland. Registered in Ireland (No. 346275). Authorised by the Financial Regulator in Ireland and subject to limited regulation by the Financial Services Authority. Details about the extent of our regulation by the Financial Services Authority are available from us on request. An AEGON company. www.aegon.ie