New customers must have paperwork signed by Sunday to get the old rate
Transamerica Life Insurance Co. will raise fees on new purchases of its variable annuity riders, starting Dec. 12.
The increase on a pair of withdrawal riders, Retirement Income Choice 1.2 and Retirement Income Max, will affect clients whose applications are signed on or after Dec. 12 and received by Transamerica on or after Dec. 30, according to announcements to broker-dealers and obtained by InvestmentNews.
Thus, customers who want to pick up the riders at the old cost need to have their paperwork signed by this Sunday and submitted before Dec. 29.
Transamerica's parent company, AEGON NV, is the 10th-largest seller of variable annuities, according to LIMRA. AEGON sold $3.8 billion in VAs year-to-date through Sept. 30, up from $2.7 billion in the year-earlier period.
Changes to Transamerica's Retirement Income Choice 1.2, a rider that allows withdrawals of up to 6%, depending on the client's age, include the following:
“ The fee on the rider will range from 0.7% to 1.25%, depending on which funds a client selects. The earlier range was from 0.45% to 1.2%
“ Fees will rise on the Income Enhancement Benefit, which works in tandem with the Retirement Income Choice 1.2 rider and raises withdrawal percentages. As of Dec. 12, the feature will cost 0.3% for single-life coverage, up from 0.15%, and 0.50% for joint coverage, an increase from 0.3%.
“ Finally, age banding has changed so that clients must be at least 80 to collect a 6% withdrawal rate. That's up from 75.
Retirement Income Max's changes are similar:
“ Withdrawal rates have been reduced and age banding has been adjusted, so that instead of ranging from 4.5% for clients 59 to 64, to 6.5% for clients over 75, customers 59 to 64 will get 4.3% income withdrawals, and those over 80 will get 6.3% withdrawals.
“ Rider fees for single or joint life are up to 1.25%, from 1%.
Transamerica also announced that it is closing down the following funds to new premiums: Invesco VI Capital Appreciation fund, Invesco VI Basic Value Fund, Janus Aspen World Wide portfolio, Janus Aspen Enterprise portfolio, Fidelity VIP Equity-Income portfolio, Fidelity VIP Growth portfolio, AllianceBernstein Large Cap Growth portfolio, Nationwide NVIT Developing Markets fund, JPMorgan Insurance Trust US Equity Portfolio, Franklin Templeton Mutual shares and MFS Variable Insurance Total Return series.
A call to Transamerica spokeswoman Cindy Nodorft was not immediately returned.
