Participating or adjustible annuity?

NTUC Income holds a 60% market share in life annuity. Our key product is the participating annuity.

PARTICIPATING ANNUITY

A male annuitant investing $100,000 at age 62 in a immediate life annuity (with no
capital refund) receives $524 per month.

This represents a payout of 6.3% per annum, comparising of a guaranteed return of 2.5% with the balance being a consumption of the capital.

If we earn a net investment return over 2.5%, we will add a bonus to the annuity. We expect an average bonus of 2.5% per annum over the future years, but this is not guaranteed.

If the annuitant wish to have a refund of the balance of capital on death, the annuity payment reduces to $446 per month (ie 5.3% p.a).

ADJUSTIBLE ANNUITY

Some annuitants prefer to have a larger payout, instead of an increasing payout.

We are considering to offer an adjustible annuity that comprise of a guaranteed amount of $524 per month, plus an non-guaranteed amount of $136, making a total payment of $660 per month. The annual payout is 7.9%

The non-guaranteed amount may be adjusted up or down, according to our investment return. If the net investment return is 5%, the amount will not be changed. If it is higher, the non-guaratneed amount will be increased. If it is lower, the amount will be reduced. Any adjustment is expected to be in small gradual steps.

The guaranteed amount will always be payable.

We may offer the option of the adjustible annuity, if there is interest in this product.

If the annuitant wish to have a refund of the balance of capital on death, the annuity payment reduces to $602 per month (ie 7.2% p.a).