Pilot offers new variable annuity product range for investors

News - Tax

Written by Ray Clancy

Tuesday, 27 July 2010 07:51

Investors can access a new variable annuity product range in a way that fits with their personal tax situation and existing investments with the option to allow wealth transfer to the next generation, it is claimed.

The AXA Group has announced an IFA pilot of a new set of variable annuity products manufactured by AXA Life Europe Limited and with distribution support provided by AXA Wealth.
Available under the Secure AdvantageTM brand, the products combine the opportunity to gain access to a range of investments with the security of a capital or income guarantee. This means clients can choose how their money is invested with a guarantee from AXA Life Europe, it says.

The range will provide downside protection and upside potential by guaranteeing either the return of invested capital at the end of 10 years or lifetime income on an immediate or deferred basis. Both of these guarantee features offer annual ‘lock-ins’ where investment growth can be secured for the purposes of calculating benefits, according to AXA.

They also offer the potential to select or construct a diversified portfolio that can include most major asset classes and leading investment managers and can allow wealth transfer to the next generation, with features that allow any remaining assets within the contract to pass to beneficiaries at time of death

The new products will be available under three tax wrappers, Personal Pension, Trustee Investment Plan and Offshore Investment Plan, allowing investors to access the product in a way that fits with their personal tax situation and existing investments.

The new products have initially been launched as a pilot with a small group of specialist IFAs. The pilot will assist the understanding of the market requirements and help identify any adjustments ahead of a full market launch, expected to be later this year.

Recent market volatility has reduced many investors’ appetite for risk, and consumers are understandably concerned about losing the value of their investments and retirement savings and customer research has shown a desire among consumers for guaranteed benefits with investment and pension products, the company says.

‘Not only does the new range offer consumers the opportunity to benefit from the growth potential of equity exposure with guarantees to protect them against downside market risks, it also provides an excellent opportunity for financial advisers to tap into a growing market segment. This product offers them the opportunity to work closely with their clients to select the best combination of downside market protection and upside market opportunity to fit their needs,’ said David Thompson, managing director of Wealth Investments and Distribution at AXA Wealth.

Ben Olsen, managing director of Grosvenor Consultancy, said: ‘We are happy to be involved in the pilot as we feel that the variable annuity market will continue to grow and we are pleased to see a company of the stature of AXA entering this market’.