The retirement income market appears to be moving out of the “embryonic” stage and into the growth stage, says a new report from The Diversified Services Group Inc., Wayne, Pa.
It its “2005 DSG Retirement Income Survey,” the firm studied the retirement income efforts of variable annuity companies by product type and activity.
Altogether, 24 companies had variable payout annuities in mid-2005, the study found. Of these, 14 are actively involved in the immediate VA market, three say they are inactive in the IVA market and seven are active in the “substitute” IVA market. (Substitutes are VAs sold primarily for annuitization.)
Industry sales of IVAs continued their downward trend, dropping to a total of $397 million for 2004, the third consecutive year of sales decline, says DSG. The IVA business also has been “disappointing” in terms of contracts sold and average premium per contract, says the firm.
However, the survey found growing success in the sale of guaranteed living benefit riders on VA contracts.
For instance, nearly 63% of the surveyed companies now offer at least one GLB rider for their VAs, says DSG, adding that the most popular form of this rider appears to be the guaranteed minimum withdrawal benefit. The GMWB feature was offered by 19.4% of the companies. Meanwhile, the guaranteed minimum income benefit was offered by 17.4%, and the guaranteed minimum accumulation benefit was offered by 16.4%.