Pacific Life Modifies Annuity Offerings, Tax Analyzer Tool



Pacific Life, looking to tweak its annuity offerings to consumers in search of income to fund retirement expenses, has introduced a fixed annuity that features a 6 percent credit for every year the annuitant defers the income.

The new annuity, marketed as Pacific Income Advantage, combines the advantages of a traditional deferred fixed annuity with guaranteed withdrawal benefits. It is sold through advisors.

“This is about taking the appeal of deferred fixed annuities a step further,” said Christine Tucker, vice president of marketing for Pacific Life’s Retirement Solutions Division. “With Pacific Income Advantage, financial advisors can offer clients guaranteed interest rates and tax-deferred interest-compounding.”

Pacific Income Advantage is designed to quell worries of interest rate fluctuations, market volatility and taxes, she added.

The withdrawal benefit, which costs extra, adds 6 percent to the annuity’s “protected payment base” for every year the contract holder decides to put off the withdrawal. A buyer with a protected payment base of $100,000 would see that base grow to $160,000 if the withdrawals are deferred for 10 years.

Income annuity sales, both immediate income and deferred income annuities, notched robust growth over the past year, with sales reaching $2.81 billion in the third quarter, an increase of 10.1 percent over the year-ago period, according to data from Beacon Research.

In the third quarter, deferred income annuities sales represented 22 percent of all income annuity sales, up from 11 percent a year ago, Beacon reported.

Consumers look to annuities to provide steady income and tax advantages, and Pacific Life also said it had introduced a tax deferral analysis tool to help advisors dig into the financial impact of increasing tax rates and longer life expectancies.

“Most clients may understand the general concept of tax deferral, but few have seen an interactive demonstration of its power and understand its role in all three phases of retirement planning: asset accumulation, distribution of income, and legacy,” she said.

She called the Tax Deferral Analyzer, powered by BlueRush, a website geared at financial advisors and broker-dealers, “incredibly easy to use.”

Financial services companies from mutual funds to broker-dealers to insurance companies are quickly ramping up their online tools with more user-friendly visuals to let people see the power of compound interest and tax deferral, and to experiment using different investment scenarios.

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Pacific Life, based in Newport Beach, Calif., also said the tax analysis tool was the first to demonstrate to advisors partial annuitization, whereby a portion of assets are converted into guaranteed lifetime income and the remainder left to accumulate tax deferred.

is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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