Fixed guarantee on surrender value will hurt insurers’ investment freedom

All pension products will have to have annuity component and the products will have to be non-zero positive rate of return. How will insurance companies work out the annuity payout? Have you filed any new pension plan?

It is important to note that it is not stipulated that insurers guarantee the amount of annuity payout at the commencement of a customer’s pension policy. Hence, the need to hedge the investment risk inherent in such an arrangement does not exist.

We work out our annuity rates at all points in time by taking into account likely investment returns over the annuitant’s lifetime, the expected longevity of the annuitant and the expenses of administering the annuity.

We share with clients our existing annuity rates, and help them understand that these could change over time as and when investment conditions change. In terms of providing the long-term investment guarantee on the underlying pension product, we ensure that the quality and amount of assets that we hold are more than sufficient to provide for the guarantees we promise. Yes, we have filed a number of innovative pension and annuity products, which will provide customers with excellent returns over time.

How should distributors and agents be sensitised about selling insurance products to retail investors, especially after the spate of regulatory changes?

There is a continuous focus within the industry to promote a culture for need-based selling. This

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