Phoenix Life customers with small annuities in payment are being given the chance to exchange their regular income for a one-off taxable lump sum.
The offer is available to a group of customers aged between 55 and 85 with an annuity in payment not exceeding £300 a year, provided that the calculation value does not exceed £2,000 and which commenced before pension freedom was introduced in April 2015.
Customers will be able to claim the offer from this month and after receiving a cash offer, they will have six weeks to consider whether or not to take it.
Those who decide they want to continue with their annuity will not need to do anything and there will be no changes to their policy.
Each customer will receive a personal outline of the amount they could receive and the tax implications of acceptance. Phoenix is also recommending customer speak to The Pensions Advisory Service if they are unsure what to do next, or seek financial advice.
The decision to go ahead follows a successful exercise carried out by the group in 2013. It is making the offer under existing ‘small pot’ legislation.
Head of retirement propositions Danny Dowd said: “We recognise that many of our customers have annuities which provide very small regular income payments. This scheme offers them a choice which they will unlikely have had before – to take a one-off lump sum now or continue to renew their annuity payments.
“Offering customers the option of taking a one-off lump sum is a win-win situation. It offers customers a greater degree of control, but also enabled us to free up resources that go into administrating small annuities.”