New fund offers high income for pensioners but lets them keep their nest egg
Pensioners hunting for an alternative to annuities are being tempted by a new fund that offers a high income but allows them to keep their nest egg invested.
The Aegon High Income fund, which launches today, will initially pay 5.3 per cent. It will invest in a range of bonds as well as property and UK and global company shares.
At launch, its biggest investments include tobacco firm Reynolds American and insurance company Legal and General.
Tempting: Pensioners hunting for an alternative to annuities are being tempted by a new fund that offers a high income but allows them to keep their nest egg invested
The fund has around 11 per cent of its assets in property and 40 per cent in various bonds. Its annual management charge is 0.7 per cent.
From April 2015, those reaching retirement age will no longer be obliged to buy an annuity with their pension savings, and will be able to take the money as they wish.
It is expected that many retirees will be looking to leave their money invested to ensure it keeps growing but will want the flexibility to access it or take an income from the pot.
This should mean there will be more of this type of fund launch to try to fill that gap.
Threadneedle recently launched a similar global multi-asset income fund that aims to combine growth and income. Its annual fee is 0.65 per cent.
Nick Dixon, investment director at Aegon, says: 'Three critical retirement trends are emerging: people want more flexible working arrangements, greater control over their pension pot and the option to keep investing their money.'
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