'Life Trust launch offers Longevity Income Plan'

Professional Adviser, 17th January 2008, by Rob Kingsbury.

'New company Life Trust launched this week offering as its first product the Longevity Income Plan, a vehicle specifically designed to deal with financial issues arising from increasing longevity.

The plan responds to the increase in life expectancy, which will see today's 40-year olds having to live on their savings and investments for 30 years or more, and the fact that in retirement people face declining income, capital erosion and increasing costs, by providing a rising income the longer the individual lives.

The plan allows for a lump sum investment of between £5000 and £1m which is held for a minimum of ten years prior to its vesting start date. The plan can be selected to become effective from age 75 or 80 and income is paid for a maximum period of 20 years.

The lump sum investment is made into a choice of three risk profile groups - Growth, Balanced and Cautious - each containing three funds from well known investment houses such as Jupiter, Gartmore, Invesco Perpetual, M&G and New Star, selected by Old Broad Street Research (OBSR).

The planholder selects a 'start date' and then receives annual income payments on their birthday. Planholders will also receive additional units, based on age, gender and unit holdings at the time which arise from the redistribution of the investment funds previously held by individuals who have died during the year.

The plan is designed to complement traditional retirement investments as a mean of ensuring planholders do not run short of income later in life. As the invested funds are held offshore in Ireland, interest on the investment is tax free and the plan is treated for tax purposes as a Purchased Life Annuity.

Chairman of Life Trust Roger Davis said the Longevity Income Plan was a "genuinely unique and innovative product" and would be the first of a suite of products to be launched by the company which would address longevity issues.

"Life Trust has taken an important first step in what is going to become a major part of the financial services industry," Davis said.

Life Trust is backed by JPMorgan, Royal Bank of Scotland and D. E. Shaw group.

The plan will be sold through financial advisers and to date the company has signed terms of business with INPartnership, The Falcon Group, Bates and Sage.'