The Big Question

Ros Altmann is director-general at Saga Group In theory, variable annuity products make sense for many consumers. They offer a lifetime guaranteed minimum income or capital amount, as well as the potential for investment returns to improve income if markets do well. The problem, however, is one of cost. The costs of the guarantees have generally detracted from customers’ expected performance. Some providers have also struggled with the costs of managing assets to back the guarantees. Careful collateralisation of swaps, capital requirements for the guarantees and general concerns about...