The product allows customers to access funds using their spare pension income.
Financial services brand free2 has launched its first product, an unsecured loan which allows customers between 55 and 70 to access funds by using their spare pension income.
The free2 loan is available at a competitive fixed annual percentage rate (APR) and will allow those aged 55-70 to borrow up to £150,000 over five to 20 years.
The loan is assessed against a customer’s guaranteed pension income and should they die before their loan is repaid, the debt is written off and there is no liability to their estate.
For customers already in annuity contracts, the loan unlocks spare pension income, while it enables those who have yet to retire to keep guaranteed income rather than transfer to a flexible product and risk using valuable benefits.
The product will be available online, through a proprietary platform that automates large parts of the application process and utilises decision-based technology to address suitability criteria and to identify and protect potentially vulnerable customers.
free2 is also in discussion with a number of partners about the development of an intermediary programme which it plans to launch later this year.
Paul Lindsay, founder and CEO of free2, said: “We think that most financial services companies have not kept pace with the changing demands of the over-55s.
"We believe that people who can comfortably afford to do so should have the freedom and choice to borrow to maximise their options in retirement.
“If you’re over 55 and receiving an annuity you can’t access a lump sum from it, unlike those who retired after 2015 who enjoy pension freedoms.
"It’s also extremely difficult to borrow large sums of money, particularly over the long term.
"Our first product caters specifically for this market and is designed to help our customers finance important plans at this point in life.
"It is also more than likely that families will need help and support from relatives more than ever in light of COVID-19 as we move into uncertain territory.
“Our customers want security and peace of mind when considering a loan. That’s why we’ve built our business with responsibility at its core.
'We’re setting a new standard in customer protection that we hope will prompt others to follow suit.
"It’s now more important than ever to ensure customers are empowered through clear information and guidance on the suitability of financial products.”
