TIAA-CREF will be raising mortality and expense (M&E) fees on its Personal Annuity Select, a variable annuity, on July 1. The M&E, at 10 basis points one of the lowest around, will be going up to 40 basis points because the companys variable sub-accounts have dropped in assets.
"VAs have not been attracting as many assets as in past years, due to the stock market decline," said a company spokesperson. "While an increase, our products [are] among the lowest cost annuities in the marketplace."
The fee applies only to assets held in variable accounts, which have dropped in assets from $1.1 billion at year-end 2000 to $739 million at year-end 2002. With the crash of the stock market, the company has garnered most of its VA assets in its fixed account.
Total costs for assets in variable accounts will range from 66 to 89 basis points. TIAA-CREF is not raising fees in its mutual funds.