The company added that when the pension transfer regime was introduced the policy conditions were updated to allow for transfers at or after pension date between ages 60 and 75 by calculation of a ‘cash equivalent’ determined by multiplying the annual amount of the annuity by a ‘conversion factor’ called the NCF.
A spokesperson from Phoenix Life said: “Deferred annuities are contracts where the policyholder benefits are defined as an amount of pension payable per annum.
"Where a policyholder wishes to take cash in place of the annuity benefit, we use a “notional cash factor” to calculate the lump sum equivalent for transfer or the purchase of an annuity elsewhere.
“This factor is calculated based upon long-term interest rates and mortality assumptions. We update this factor at least quarterly and may update it more frequently in periods where interest rates are regularly changing.”
julia.faurschou@ft.com
