Over in America a review shows that there is a widespread hike in variable annuity charges. This review, of ten of the largest providers of this form of contract, by Symetra Life Insurance, found that there are widespread increases in the fees charged to clients, some reductions in guarantees and benefits being offered under many riders and sometimes the complete elimination of an entire guaranteed living benefit ooption. They do tell it different in America.
The findings of the review were based on an assessment of product prospectuses active from May 1, last year to May 1, this year, that include guaranteed living benefit options for the ten largest variable annuity providers as defined by 2008 overall sales using non-qualified money, according to data from the Morningstar Annuity Research Center (MARC). According to the review, nine of the ten providers raised their fees on multiple living benefit options within their product suite over the 12-month time span under review. Meanwhile, eight of those ten have discontinued at least one guaranteed living benefit option from their product line up.
There is quite clearly a significant trend towards less flexibility and higher charges within some of the most common riders, suggests Pat McCormick, senior vice president for both sales and distribution at Symetra. These annuities can and will continue to play a major role in building retirement income as stockmarkets recover. That is why now, at such a critical juncture for our retirement industry (in America), it is so important to give clients a dependable selection of options and not surprise them with charges and features that might change dramatically from one year to the next, he added.
It’s really not so different here in the UK, but then again the products sold here did come from over there. Certainly when retirees are looking for annuity quotes to find the best annuity rates they are not really giving consideration to these complex and expensive products.
