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.
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.