Products January 28, 2008

Prudential Annuities Broadens Annuity Benefit Options

Prudential Annuities is adding three new options (two optional living benefits and one optional accumulation benefit) to its variable annuities to help investors capture an annuity’s highest daily value.
Reported by

According to Prudential, optional living benefits are very attractive to investors: the overall election rate for such benefits on Prudential Annuities’ variable annuity sales during the third quarter of 2007 was 81%. “From our perspective, the living benefits revolution began in 2005 with the debut of Lifetime Five—the industry’s groundbreaking guaranteed-withdrawals-for-life living benefit,’ said David Odenath, President of Prudential Annuities, in a company statement.

Highest Daily Lifetime Seven and Spousal Highest Daily Lifetime Seven are two new variable annuity optional living benefits. They offer a protected withdrawal value based on 7% annual compounded growth on the highest daily account value and daily opportunities to capture greater lifetime income with a 5%-8% income stream, depending on age at first withdrawal, guaranteed for life. Annuitization is not required.

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Key features of HD Lifetime Seven and Spousal HD Lifetime Seven include:

  • Daily Step Ups Before Withdrawals Begin: HD Lifetime Seven and Spousal HD Lifetime Seven give investors the opportunity to increase their Protected Withdrawal Value (the basis for guaranteed lifetime income) every day the market is open for trading. The Protected Withdrawal Value is determined by comparing every daily account value growing at an annual 7% compounded rate of return for the first 10 years from benefit election or until an investor’s first withdrawal, whichever is sooner. The protected withdrawal value is only available through withdrawals. It is not available as cash or a lump sum.
  • Guaranteed Lifetime Income: HD Lifetime Seven and Spousal HD Lifetime Seven offer a lifetime annual income stream ranging from 5% to 8% of the Protected Withdrawal Value, with the potential for future increases and no annuitization required. (Annuitization at a particular age may be required by the terms of the base annuity.)
  • Proprietary Risk Management Model: HD Lifetime Seven and Spousal HD Lifetime Seven incorporate the fundamentals of a proven proprietary risk management model that monitors an investor’s account daily, and, only if specified by the model, systematically transfers amounts between the variable investment portfolio and the AST Investment Grade Bond Portfolio.
  • Post-Withdrawal Step-Up Opportunities: After withdrawals begin, HD Lifetime Seven and Spousal HD Lifetime Seven provide annual opportunities for increased income based on the account’s highest quarterly value.

HD Lifetime Seven and Spousal HD Lifetime Seven will replace the Highest Daily Lifetime Five benefit in all states where the two new options are approved (they are not yet available in all states). The new options allow investors the opportunity to increase their annuities’ income potential every day the market is open—up to 250 times a year (for the first ten years or until the first withdrawal if earlier).

Optional Accumulation Benefit

The optional accumulation benefit, Highest Daily Guaranteed Return Option (HD GRO), offers protection of a guaranteed minimum account value and the opportunity to automatically lock in the annuity’s highest daily value. The annual cost of HD GRO is 0.35%, assessed against the average daily net assets of the sub-accounts. The fee is in addition to the fees and charges associated with the chosen annuity. There is no minimum issue age for HD GRO. The maximum issue age is 84.

Key features of HD GRO include:

  • Principal Protection Guarantee: HD GRO creates the initial guarantee on the day that the benefit is added to the annuity, and guarantees that the account value on the tenth anniversary of that day will not be less than the initial account value. Each benefit anniversary after that, a new guarantee is created. With respect to each subsequent guarantee, HD GRO identifies the highest account value that occurred between the date of that benefit anniversary and the date on which HD GRO was added to the annuity, guaranteeing that the account value ten years after that benefit anniversary will be no less than the highest daily account value that occurred during that time period. Purchase payments are adjusted for any credits or withdrawals.
  • Proprietary Risk Management Model: Like HD Lifetime Seven and Spousal HD Lifetime Seven, HD GRO incorporates the fundamentals of a proven proprietary risk management model that monitors an investor’s account daily, and, only if specified by the model, systematically transfers

The new options can be elected at contract issue or post issue.

Products January 28, 2008

Transamerica Beefs Up TPA Servicing

Third Party Administrators (TPAs) now have a new, more efficient way of conducting business – and there are benefits for advisers, as well.
Reported by
Transamerica Retirement Services has launched what the firm describes as “the industry’s first, all-inclusive Web-based, virtually paperless, plan administration tool for TPAs’. The technology is part of a new product called “Transamerica Partner iSeries,’ that will “…enable TPAs to perform all functions of plan administration more efficiently and securely than previously made available to them by retirement providers,’ according to a Transamerica press release.
In addition to helping improve the everyday functions of TPAs, Transamerica Partner iSeries also has benefits for financial advisers who will be able to work with a more competitively priced product that better involves TPAs as ERISA experts, according to the firm.
Many of the functions normally conducted by TPAs with a retirement provider are done exclusively through paper transactions that add time and complexity to plan administration. With the Transamerica Partner iSeries, Transamerica says that TPAs have access to many features including:
  • Online Plan Installation: All plan specifications are entered online via a secure Web site, which will substantially reduce the amount of time that the plan installation process takes. The entire plan installation process is tracked and completed online with the help of a detailed task list, provided to the TPAs, which will walk them through the installation process.
  • E-mail Notification System: The new system sends notification and confirmation e-mails to the contact person assigned to each account, as well as a backup contact, in order to make sure that necessary action can be taken immediately.
  • Enhanced Security System: Transamerica Partner iSeries comes with a multi-level security system that allows varying levels of access to each person at the TPA firm. This system helps make sure that the right people are the only ones getting the right information at all times. It will also provide plan access based upon location for TPAs with multiple offices.
Transamerica Partner iSeries will be available to plan sponsors through brokers and TPAs immediately. While available for plans of all sizes, Partner iSeries will be Transamerica’s sole offering for new plans with less than $500,000 in expected first-year deposits.
Kent Callahan, president and CEO of Transamerica Retirement Services, noted, “The retirement plan market is going through a dramatic change. Two to three years ago the trend for providers was to move up-market to larger retirement plans. Now, most of these providers see the value of the small-plan market and want back in. Transamerica has always been dedicated to this market, and the Partner iSeries not only validates that claim, but further solidifies our position as a leader in this space.’

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