Guaranteed Return on Annuity Has Limits

[omni550]

"As of Friday, Prudential Annuities has suspended the ability of policyholders with 14 types of benefits to make further contributions. And because the size of the annuity payment is based on how much is in the annuity, policyholders who had planned to add to their accounts will get payments that are far lower than they had expected."

“You’re going to see every major insurer out there who has products that are considerably higher than what the market would see today do this,” said Brian Fenstermaker, managing principal at the Envision Consulting Group. “While it was a surprise, it wasn’t a surprise. We always figured these benefits that were very good wouldn’t be around forever.”

http://www.nytimes.com/2012/09/15/y...stors.html?nl=your-money&emc=edit_my_20120917

omni

 

[Sun456]

Thanks for posting this. I had not been notified by Prudential (or at least not that I know of). But after seeing this I logged into my account and saw that they aren't accepting new payments. I'm pretty glad I grabbed it when I could.

 

[ziggy29]

"As of Friday, Prudential Annuities has suspended the ability of policyholders with 14 types of benefits to make further contributions. And because the size of the annuity payment is based on how much is in the annuity, policyholders who had planned to add to their accounts will get payments that are far lower than they had expected."

Another casualty of the Fed's War on Savers.

 

[Animorph]

Guess that means you're getting a good deal if the insurance company is getting scared.

 

[clifp]

Another casualty of the Fed's War on Savers.

Yup the slaughter continues. I just wish the war wasn't so one sided.
Where is the Security Council when you need them.

 

[fritz]

Also from the article - a little more concerning if you own one (so much for feeling like you got solid guarantees with your annuity).

But experts said that Prudential’s decision to stop people from putting new money into their annuities was not the worst of what was likely to happen across the industry. “They can get a lot more stringent,” Mr. Milevsky said. “Wait until they tell him they’re going to restrict his investment choices. Or they’re going to raise his fees.” Mr. Ferris said the company evaluated its benefits each day.

 

[brewer12345]

There is a lot of wiggle room in those 250+ page prospecti...

 

[Midpack]

If it sounds too good to be true it probably is. No company, especially in financial services will take a loss beyond very short term (if then), no matter what they might lead one to believe. One that does will fold eventually, proving the adage true no matter what...

Some annuitants, pensioners, Soc Sec recipients, savers and others may face unpleasant surprises in the decades ahead despite mountains of (ongoing) denial to the contrary.

 

[mathjak107]

A study by moshe milevsky concluded that the insurance companies may

be pricing the guaranteed minimum withdrawal benefit annuity these way to low right now and they may turn out to be real bargains until they realize it.

guess they realized it.