Pension SuperHaven is launching to offer a new workplace pension product that guarantees income that is typically 10 to 15 per cent more than that paid by annuities and which includes the potential for investment bonuses.
The new product is an at-retirement that allows workplace-defined contribution (DC) pensions to be converted into income.
Its founder Edi Truell of Disruptive Capital, explains that its investment flexibility and pricing strategy, favouring younger annuity buyers while avoiding those over 75, enables payouts higher than comparable annuities.
Meanwhile, the Pension Protection Fund (PPF) guarantees 100 per cent of benefits with annuity indexation capped at 2.5 per cent, provided the scheme meets the regulations set out in the Pensions Act 2004.
Pension SuperHaven is negotiating with five master trusts to offer this as a retirement income option and has partnered with Retirement Line, the UK’s largest independent annuity distributor.
Truell previously shelved his Pension SuperFund DB consolidator after regulatory delays. He has invested £52 million in this new venture, which has political backing. The product also offers a capital preservation option, refunding relatives on death in exchange for a lower initial income.
However, some industry commentators question whether it has full regulatory approval.
Truell says: “We have worked out how to transfer DC into DB. This originated from Henry Tapper coming and asking how to put the people taken out of the British Steel scheme back into DB. The PPF know we aren’t posing a risk. They know my track record of supporting distressed DB schemes. Politicians generally love it. The product is only marketed through master trusts, GPPs and for individuals where they are getting full financial advice.”
Robert Reid, director, Syndaxi Financial Services says: “I would be very cautious about this product and would want to see a clear statement of approval from the Pension Protection Fund that they think this structure is OK. I don’t think the FCA can stay quiet here either. They are moving into retail without retail protections.”
A PPF spokesperson said: “The Pension SuperHaven will be eligible for PPF compensation if it meets the entry requirements as set out in the PPF Regulations in the Pensions Act 2004. If the Pension SuperHaven is deemed eligible, it will join more than 5,000 pension schemes with close to 9 million members under our protection. We will continue to work with other government bodies to determine whether PPF protection is right for this type of new offering to the market.”
An FCA spokesperson says: “While we cannot comment on specific firms, whenever consumers are considering investing in a pension, we would urge them to think carefully about the features, risk and benefits of the product they are investing in, including the protections available, and take advice where necessary.”
