Equitable enhances 2 of its RILA products

Equitable announced updates to two of its market-leading registered index linked annuity (RILA) products. These updates are designed to help financial professionals and their clients manage volatile equity markets and generate lifelong income amid rising inflation and interest rates.

Equitable’s Structured Capital Strategies Income (SCS Income), launched in November 2021, increased certain income rates credited under the income option by 25 bps. SCS Income is a RILA that combines some protection from equity market volatility while allowing investors to take advantage of equity market growth potential up to a cap, with a predictable stream of income in retirement — a significant advantage at a time when equity markets have declined by 20%, and inflation has reached highs not seen since 1982.

In addition, both commission and fee-based versions of Equitable’s Structured Capital Strategies PLUS (SCS PLUS) RILA are also now available in New York, extending its availability to a greater number of financial professionals and their clients.

“Clients are experiencing the perfect storm — a volatile equity market, inflation higher than we’ve seen in four decades, rising interest rates, and fixed income markets that are not providing the investment diversification they once did,” said Steve Scanlon, Head of Individual Retirement, Equitable. “As a result, the traditional 60/40 stock and bond portfolio has rightfully come into question. We believe that an annuity used as an asset class in a portfolio can help mitigate these challenges by providing for income, growth opportunities and the ability to address some equity market risk. The result of adopting these updated annuity-based products can be a more diversified and resilient portfolio.”

Equitable created Structured Capital Strategies, the first registered index-linked, or buffered, annuity in 2010.

RILA products such as SCS PLUS can offer clients who are reaching retirement age partial protection from the sequence of return risk associated with a correction or bear market. Recent research shows investors value mitigating risk to their retirement income. In a 2021 study from CANNEX and The Alliance for Lifetime Income, 55% of investors said protected income is important to them.

The opportunity for partial downside protection can also be an ideal portfolio asset for consideration by affluent clients who see the possibility for tax increases on the horizon. Annuities are one type of financial product that can offer tax-deferred accumulation and tax-free movement among subaccounts, and annual contributions are rarely capped. These tax advantages can make the product attractive as a wrapper for investments with high asset turnover, such as REITS and aggressive growth funds.

The latest updates to the Structured Capital Strategies variable annuity suite follow updates made earlier this year to Equitable’s Investment Edge investment only variable annuity. Investment Edge updates included the addition of 20 structured investment option segments that provide partial downside protection from equity market losses and upside potential up to a cap — similar to those available in the Structured Capital Strategies suite of variable annuities — and asset allocation options based on model portfolio strategies for moderate growth and growth risk profiles that give clients access to popular investment choices in a tax-deferred format.

 About Structured Capital Strategies

Through the Structured Capital Strategies suite of products, clients can participate in one of several mainstream equity market indices up to a cap, with a buffer protecting against the first -10%, -15%, -20% or -30% of potential losses. Clients can choose the equity index on which the performance of their investment is based, such as the S&P 500 Price Return Index, Russell 2000® Price Return Index, iShares MSCI EAFE ETF or NASDAQ 100 Price Return Index. They can also select the duration of their investment and its level of downside protection based on their goals and risk tolerance.

The Dual Direction feature available in some of the suite’s SCS offerings allows clients to earn a positive return even if the S&P 500 declines. It does this by crediting a return equal to the percentage of the decline up to, or equal to, the amount of the buffer (-10%, -15% or -20%). Positive market returns are credited up to the cap.

Structured Capital Strategies Income adds two innovative ways to create guaranteed income in retirement, including the ability to start receiving income immediately from a registered index-linked annuity, a level income option which provides an income rate initially based on age at the time of purchase and that does not decrease, and an accelerated income option, which provides a higher rate of income in early retirement when individuals may have higher expenses.