The cost of guarantees on variable annuity products should be kept at 1% or less of the fund value per annum for consumers to be willing to pay for them, according to three-quarters of attendees at a recent Watson Wyatt debate.
The majority of the audience of senior financial services executives (57%) at the Watson Wyatt Debating Forum were in favour of the main motion that "this house believes that variable annuities provide peace of mind at a fair price". Asked what sort of percentage of fund per year they thought consumers would be prepared to pay for guarantees for minimum income, 74% said 1% or less per year. Meanwhile 8% said over 1.5% would be acceptable. Some 67% of the audience said variable annuities were suitable for at least 10% of consumers; with 47% suggesting between 10 and 25%. The audience w...
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