L&C increases max income on annuity

London & Colonial has increased maximum income levels on its New Open Annuity.

A change in the way it calculates limits, basing them on an average of three market annuity rates, rather than internal rates, means pensioners could receive more than they would with an alternately secured pension (ASP) or unsecured pension (USP).

USP and ASP incomes are calculated from the Government Actuary's Department (GAD) tables. USP income can bet up to 120% of GAD, while ASP can be between 55% and 90% of GAD.

New Open Annuity's calculations mean it can offer between 50% and 120% of the average annuity figure.

The New Open Annuity gives higher maximum incomes to those of all ages from 50 upwards. A 65-year old with a £100,000 fund would be able to draw a maximum of £9,137 compared with £8,760 on income drawdown.

Maximum incomes increase substantial with age, as an ASP would only pay £9,180 from age 75 upwards, while New Open Annuity could pay up to £20,476 for an 85-year old.

Adam Wrench, product development manager at London & Colonial, says: "The New Open Annuity is suitable for clients who are primarily focused on extracting the maximum income from their pensions.

"The fund value will vary and usually reduce over time, so it is not for those with smaller funds or whose only retirement income is generated by the annuity."

Contact: John Bakie, Tel: 020 7484 9805, e-mail: John.Bakie@incisivemedia.com