MutualFundWire.com: Fidelity Just Met a Retirement Income Partner
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Monday, November 16, 2009|
Fidelity Just Met a Retirement Income Partner
Fidelity is partnering with MetLife for a new retirement income product. On Monday MetLife unveiled the MetLife Growth and Guaranteed Income deferred variable annuity, which includes a living benefit and will be distributed exclusively by Fidelity.
Joan Bloom, executive vice president with Fidelity Investments Life Insurance Company, noted that the MGGI effectively replaces the Fidelity Growth and Guaranteed Income product, which was discontinued in March.
"The features are pretty much identical," Bloom told The MFWire. "The pricing is a little different and there is some simplification."
Bloom confirmed that MGGI will be available for individual purchase, not through retirement plans like 401(k).
The new offering includes the Fidelity VIP FundsManager 60% Portfolio, a fund of funds offering. MGGI costs 190 to 205 basis points above the management fee for the portfolio (which is 84 bps), plus a 200 bps surrender charge in the first five years.
Bloom noted that Fidelity "had a preexisting relationship with MetLife," which made the partnership a natural one.
"We sell their fixed annuity products," Bloom said, praising MetLife's "strong ratings" and its "great brand."
Company Press Release
BOSTON & NEW YORK--MetLife, a leading provider of insurance, employee benefits and financial services, and Fidelity Investments®, one of the world’s largest providers of financial services and retirement products, today announced the introduction of a new deferred variable annuity product designed for individuals who are either retired or transitioning to retirement. The MetLife Growth and Guaranteed IncomeSM (MGGI) variable annuity is distributed exclusively through Fidelity and is the only deferred variable annuity with a living benefit sold through the company.
The companies noted that their relationship comes at a time when an increasing number of Americans are seeking strategies to help them maximize and protect their incomes in retirement. A MetLife/Harris Interactive polli conducted in September showed that as a result of the recent economic downturn, 68 percent of Americans are placing a much greater importance on protecting their portfolios against market losses than on participating in stock market gains. MGGI allows individuals approaching or living in retirement to use a portion of their assets, either from a 401(k), 403(b), IRAii or other savings, to purchase guaranteed lifetime income for an individual or for his or her spouseiii.
The product provides growth potential when the market improves and downside income protection if the market declines. Individuals also retain control of their assets and can access a portion of their account value at any time during the contract.
“By collaborating with MetLife, Fidelity is able to make an annuity product available to investors that combines the strength of two industry leaders,” said Jon J. Skillman, president of Fidelity Investments Life Insurance Company. “MGGI features an insurance guarantee backed by MetLife and the proven money management expertise of Fidelity, which together form a comprehensive, yet simple solution for those seeking retirement income protection, as well as upside growth potential and flexibility.”
“At a time when millions of consumers are assessing the impact of the recent economic downturn on their portfolios, we’re very excited to join with Fidelity to offer a simple way for individuals to secure a steady stream of income in retirement -- similar to what they enjoyed during their working years,” said Robert E. Sollmann, head of Retirement Products, MetLife. “Our relationship with Fidelity, and the launch of MGGI, is another way we’re creating more pathways for consumers to access much-needed guaranteed income in retirement,” added Michael K. Farrell, head of U.S. Distribution, MetLife.
The Potential MGGI Customer
The economic events of the past 18 months have led many pre-retirees and retirees to become more disciplined and conservative when it comes to their retirement savings and investments, according to MetLife’s recent study. Among older baby boomers (ages 55-65) this conservatism is acutely felt, with 16 percent in the MetLife poll saying that they are more focused on having reliable monthly income versus focusing solely on the size of their nest egg.
The companies said these market-driven concerns, combined with dwindling traditional income sources, such as pensions, and lingering uncertainties about Social Security, are causing retirees to seek alternative solutions for generating reliable income in retirement. This becomes increasingly important as increased longevity is creating the need for investors to plan for what could be a retirement that spans 30 or more years.
Individuals may want to consider MGGI if they are seeking:
Guaranteed lifetime withdrawals of between 4 percent and 6 percent of the single premium investment, depending on the age of the client. Once established, the withdrawal percentage does not change.2
Flexibility to choose when and how often to take the guaranteed withdrawal amount once the youngest annuitant turns 59½. Withdrawals can be systematic or on request (excess withdrawals will reduce future payments3).
Protection of income from market exposure along with the opportunity to benefit from positive market performance.
A simple product with a combination of built-in benefits, as well as one asset-allocation portfolio.
MGGI is backed by MetLife and includes a built-in guaranteed withdrawal benefit for life and a death benefit that allows individuals to leave assets to their beneficiaries.iv It features the Fidelity® VIP FundsManager® 60% Portfolio, a simple investment option that offers exposure to multiple asset classes in one investment. The “fund of funds” portfolio invests in more than 30 mutual funds and maintains an appropriate target asset allocation mix of 60 percent investment in equity, 35 percent fixed income and 5 percent money market portfolios. It also offers the potential for reduced volatility through diversification, as well as growth potentialv.
There are no benefit or investment choices for consumers to make with MGGI, so the process of applying for and purchasing the annuity is easy to understand and quick. The minimum single premium is $50,000. All annuitants must be between the ages of 50 and 85.
The guaranteed withdrawal benefit for life provides for a set withdrawal rate determined by the age at first withdrawal on or after age 59½ : 4 percent for ages 59½ - 64; 5 percent for ages 65 – 75; or 6 percent at age 76 or older.
Fees and charges for MGGI include an annual annuity mortality and expense charge for single and joint life coverage of 1.90 percent and 2.05 percent, respectively; underlying fund expenses (currently 0.84 percentvi); and a surrender charge of 2 percent for the first five years. Surrender charges do not apply to guaranteed withdrawal benefit amounts, annuitizations and death benefits; and all fees and charges are deducted from or reduce the account balance. There are no maintenance fees or initial sales charges for the product.
To help individuals learn more about MGGI and how it can fit into their overall retirement income plan, Fidelity has also created a Web page with a variety of educational resources, including informative videos and interactive tools at www.fidelity.com/incomeplus. They can also speak with a Fidelity annuity specialist directly at (800) 544-2442.
About Fidelity Investments & Fidelity Investments Life Insurance Company (FILI)
Fidelity Investments is one of the world's largest providers of financial services, with assets under administration of nearly $3.1 trillion, including managed assets of more than $1.4 trillion as of October 31, 2009. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to over 20 million individuals and institutions as well as through 5,000 financial intermediary firms. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, the largest mutual fund supermarket, a leading online brokerage firm and one of the largest providers of custody and clearing services to financial professionals. For more information about Fidelity Investments, visit www.fidelity.com.
MetLife, Inc. is a leading provider of insurance, employee benefits and financial services with operations throughout the United States and the Latin America, Europe and Asia Pacific regions. Through its subsidiaries and affiliates, MetLife, Inc. reaches more than 70 million customers around the world and MetLife is the largest life insurer in the United States (based on life insurance in-force). Additionally, MetLife provides benefit solutions to more than 60,000 group customers in the United States, including over 90 of the top one hundred FORTUNE 500® companies. The MetLife companies offer life insurance, annuities, auto and home insurance, retail banking and other financial services to individuals, as well as group insurance and retirement & savings products and services to corporations and other institutions. For more information, visit www.metlife.com.
MetLife is not affiliated with any Fidelity Investments company.
VIP refers to Variable Insurance Products. VIP Portfolios are available for investment only by the separate accounts of insurance companies.
MetLife Growth and Guaranteed Income annuity (Policy Form Series No. 8800 (10/09)) is issued by MetLife Investors USA Insurance Company (MLIUSA), 5 Park Plaza, Suite 1900, Irvine, CA 92614 and, in New York (Policy Form Series No. 6800 (10/09)), only by Metropolitan Life Insurance Company, 200 Park Avenue, New York, NY 10166 (each, a "MetLife" company). MLIUSA and Metropolitan Life Insurance Company are affiliates. The contract's financial guarantees are solely the responsibility of the issuing insurance company. Fidelity Brokerage Services, Member NYSE, SIPC, and Fidelity Insurance Agency, Inc. are the distributors; they are not affiliated with any MetLife company.
Before investing, consider the investment objectives, risks, charges, and expenses of the variable annuity and its investment options. Call or write to Fidelity or visit Fidelity.com for a free prospectus containing this information. Please read the prospectus and consider this information carefully before investing. Product availability and features may vary by state. Please refer to the contract prospectus for more complete details regarding the living and death benefits.
The contract value is subject to market fluctuations and investment risk so that, when withdrawn, it may be worth more or less than its original value.
Pursuant to IRS Circular 230, MetLife is providing you with the following notification: The information contained in this document is not intended to (and cannot) be used by anyone to avoid IRS penalties. This document supports the promotion and marketing of insurance products.
You should seek advice based on your particular circumstances from an independent tax advisor.
Any discussion of taxes herein or related to this document is for general information purposes only and does not purport to be complete or cover every situation. Tax law is subject to interpretation and legislative change. Tax results and the appropriateness of any product for any specific taxpayer may vary depending on the facts and circumstances. You should consult and rely on your own independent legal and tax advisors regarding your particular set of facts and circumstances.
Withdrawals of taxable amounts are subject to ordinary income tax and, if made.
Withdrawals of taxable amounts are subject to ordinary income tax and, if made before age 59½, may be subject to a 10% federal income tax penalty. If applicable, withdrawals will reduce the living and death benefits and contract value. Withdrawals may be subject to withdrawal charges.
Like most annuity contracts, MetLife contracts contain withdrawal charges, limitations, exclusions, holding periods, termination provisions and terms for keeping them in force. Contact your representative for complete details.
Fidelity Annuity Specialists are licensed insurance agents.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, and Fidelity Insurance Agency, Inc. are the distributors. This product may not be available in all states.
Fidelity, Fidelity Investments, VIP FundsManager and the Fidelity Design logo are registered service marks of FMR LLC.
Fidelity Brokerage Services LLC, Member NYSE, SIPC
900 Salem Street, Smithfield, RI 02917
© 2009 FMR LLC. All rights reserved.
This annuity is issued by MetLife Investors USA Insurance Company (MLIUSA) and, in New York, only by Metropolitan Life Insurance Company, (each, a "MetLife" company). The contract’s financial guarantees are solely the responsibility of the issuing insurance company.
1 Guarantees apply to certain insurance and annuity products (not securities, variable or investment advisory products) and are subject to product terms, exclusions and limitations and the insurer’s claims-paying ability and financial strength.
2 Benefit base will be compared to contract value annually and increased when the contract value exceeds the benefit base on anniversary dates prior to the oldest annuitant reaching age 85. After age 85, customers will no longer be eligible for potential benefit base increases. Withdrawals will reduce the contract value and death benefit and may impact whether your income payments will increase even if your contract value is increasing.
3 Excess withdrawals and any withdrawal prior to age 59½ may significantly reduce the guaranteed withdrawal benefit amount, and, if taken during the first five contract years, may be subject to a 2% surrender fee. Withdrawals of taxable amounts are subject to ordinary income tax, and, if made before age 59½, may be subject to a 10% IRS penalty. Speak with an Annuity Specialist for details.
i MetLife Lessons Learned Poll conducted between September 23, and September 25, 2009.
ii Before purchasing an annuity with 401(k), IRA, or 403(b) assets, you should evaluate how the annuity and 401(k), IRA, or 403(b) compare with respect to benefits, fees, and choice of investment options.
iii Income payments may reduce account value.
iv Beneficiaries may elect to receive contract value or a return of purchase payment, adjusted for withdrawals, payable in periodic payments that annually do not exceed your guaranteed annual income. See the prospectus for details.
v The Fidelity VIP FundsManager 60% Portfolio is subject to the volatility of the financial markets in the U.S. and abroad, and may be subject to the additional risks associated with investing in high-yield, small-cap, and foreign securities. Please note that the portfolio’s performance depends on that of the underlying funds in which it invests. The portfolio is managed by Fidelity Strategic Advisers,® Inc., a subsidiary of FMR LLC. Although it may help manage investment risk, diversification does not guarantee protection again loss or positive investment performance.
vi This ratio reflects a 0.05% waiver of the fund's management fee that Strategic Advisers (the fund's investment manager) has contractually agreed to waive until July 31, 2010.
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