SSQ launches guaranteed minimum withdrawal productBy Alain Thériault | October 27 2007 01:57PM
With the launch of ASTRA Guaranteed Income, SSQ Financial Group has become the fifth insurer to launch funds with guaranteed minimum withdrawal benefits (GMWB). To set itself apart from the competition, SSQ has established a 5.5% commission for back-end load funds and a minimum deposit of $20,000.
A sure sign of a highly competitive market, Michel Pelletier did not hesitate to adjust his Oct. 1 launch in accordance with innovations announced by Manulife Financial a few days earlier.Mr. Pelletier, vice-president, actuarial and product development at SSQ Investment and Retirement, endowed his product with the option of guaranteed lifetime income payments starting on Jan. 1 in the year the client turns 65. "Before that, it was the following Jan. 1," he explains. Also, in the footsteps of Manulife, he removed the restriction on the number of years in which a 5% annual bonus will be paid to clients who make no withdrawals in a given year.
In Mr. Pelletier’s opinion, insurers have no choice but to follow this new trend. Moreover, he believes the arrival of GMWB funds is "a revolution almost as big as the arrival of universal life in Canada in the 1980s."
"In the U.S., half of segregated fund sales are products with guaranteed minimum withdrawal benefits. In Canada, the response has been incredible. There’s a constant buzz about this product."
While he hopes to attract new money with ASTRA Guaranteed Income, Mr. Pelletier also expects to see transfers from his regular ASTRA funds to the GMWB funds. "We’d rather do that than see the money go elsewhere," he declares.
The GMWB rider can be attached to 19 of SSQ’s funds managed by various institutional managers, including the new range of four Celestia portfolio funds, a new bond fund managed by Optimum, and a new treasury fund. The GMWB fees and maturity and death guarantees range between 35 and 85 basis points, with one basis point equivalent to 0.01%.