Annuity product developers are making more changes - adjusting fees and payout levels, and switching to lower-volatility sub-account options. Such activity ramped up during the second quarter and continued into the third - with the most common changes being consolidations of age bands on lifetime withdrawals, and the most significant being buyback offers and premium suspensions.

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Allianz released the Investment Protector GMAB in July. For 1.3%, it guarantees the greater of account value or 80% of the highest anniversary value step-up after 10 years. Allianz also plans to increase the fee by 0.35% on its Income Protector series of lifetime GMWBs.

AXA filed a buyback offer for certain Accumulator contracts issued between 2004 and 2009. Annuity holders can terminate the lifetime GMWB, enhanced earnings benefit or other death benefit in exchange for a credit.

Hartford closed Personal Retirement Manager and Leaders IV in May and required certain contract owners to reallocate investments by Oct. 4 or lose the living benefit. Owners will be required to place a minimum 40% of assets in fixed income and a risk-based asset allocation model.

Jackson National Life updated Lifeguard Freedom Flex: The base step-up offers a 5% annual bump, and the fee was decreased by 0.1%. In addition to 6% and 7% annual step-ups, quarterly step-up options at the 5%, 6% and 7% levels were added. Fees for the quarterly step-ups are 0.1% or 0.15% higher than their annual counterparts. The fee went up by 0.15% for the Freedom Flex version with the optional death benefit. Jackson also raised the Lifeguard Freedom 6 Net fee by 0.15%; withdrawal percentages for ages 75 and 81 were reduced by 0.5% and 1%, respectively.

Lincoln cut the lifetime withdrawal on the joint version of i4LIFE Advantage with guaranteed income bond; at age 65 it is now 3.5% (from 4%). Age bands were reduced to six from seven and additional payments to joint life riders after year one are now limited to $50,000 per year if cumulative investment exceeds $100,000. Lifetime Income Advantage 2.0 Protected Funds had a withdrawal percentage reduction; the single life version added an age band and reduced the age 55 withdrawal to 3.5% from 4%. The joint life version dropped to 4.5% for age 65 and added age 75-plus. The eligibility age for the double withdrawal percentage upon nursing home admittance increased to 70 from 65.

Nationwide issued Destination Architect 2.0, costing 0.4%, with 110 sub-account options. It offers a lifetime GMWB at 0.8% with a 4.5% withdrawal (5% after five years). The joint version is 4.25% at age 65 for a 0.95% fee and includes a highest anniversary value.

Pacific Life released Pacific Choice, for a 1.2% fee (B-share), with two lifetime withdrawals and an accumulation benefit. The Core- Income Advantage 4 Select offers 4% lifetime withdrawal with highest anniversary value for a 0.35% variable fee. The CoreIncome Advantage Select offers 5% lifetime with highest anniversary value for a 0.7% fee (4.5% lifetime withdrawal at 0.55% with Pacific Destinations).

SunAmerica increased the withdrawal percentage by 0.25% on the SA Income Builder-Dynamic Option. The single life version now offers 5.25% lifetime withdrawals (5% joint). Its new Income Builder benefit has a fee of 1.1%, a 5% lifetime withdrawal at age 65 and two step-ups, highest anniversary value and 6% fixed.

Transamerica updated 39 contracts, with new death benefits, investment options and elimination of the initial payment guarantee and fixed life annuitization. It also issued Retirement Income Plus, offering a 5.5% lifetime withdrawal at age 65 (5% joint); it includes highest anniversary value as well as a 5% fixed step-up, with six investment options. The contract fee is 1.3% and the single life version of the GLWB is 1.25%.

 

Frank O'Connor is product manager for annuity data at Morningstar.