By Cyril Tuohy
MetLife and Fidelity Investments have announced the launch of a deferred variable annuity designed to protect the principal for investors with the patience to hold it for 10 years or more.
The MetLife Accumulation Annuity is the latest offering from an investment industry seeking to structure annuities so that they can take better advantage of market gains while limiting market losses.
Structuring annuities to take advantage of market gains is a key draw for retirement investors who want higher returns in an era of historically low interest rates, yet who also depend on their principal to keep generating income.
Elizabeth Forget, executive vice president of Retail Retirement & Wealth Solutions at MetLife, said in a news release that the product offers investors “a simple, convenient solution to help them grow and safeguard their retirement assets.”
For a fee, investors can add a preservation and growth rider that allows investors a guaranteed return on the initial investment at the end of the 10-year period, MetLife and Fidelity said in a joint statement.
On every contract anniversary, investors can reset the guaranteed amount to a higher level if the account value has increased, the companies said.
The minimum investment is $25,000 for the accumulation annuity investment portfolio, which is managed by Fidelity.
Cyrus Taraporevala, executive vice president of Investment Solutions at Fidelity Investments, said the Accumulation Annuity is “an excellent option” for investors in search of growth potential while maintaining the security of their initial investment.
It’s not the only option, though, as MetLife strengthens its portfolio of annuity products through Fidelity. MetLife’s Growth and Income deferred variable annuity and its Guaranteed Income Builder fixed deferred income annuity are also available through Fidelity.
With the demise of defined benefit pension plans and Congress looking for new, private-sector ways to guarantee future income for tens of millions of retirement investors, annuity carriers see an opportunity to expand their annuity portfolios and grow their market.
Sales of fixed and variable annuities rose 6 percent to $177.7 billion in the first nine months of 2014 compared to the year-ago period, according to LIMRA Secure Retirement Institute.
Variable annuity sales dipped 3 percent to $105.9 billion in the first nine months of this year compared to the year-ago period, LIMRA SRI said.
Cyril Tuohy 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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