惠悦国际定制年金产品咨询报告

DesigningannuityproductsforconsumersneedsPresentedbyMikeWadsworth

Partner,WatsonWyattAgendaOptionsforgeneratinglifetimeincomeConsumerneedsInvestingforlifeManagingsurvivalAnewmodel"Idon'twanttoachieveimmortalitythroughmywork-Iwanttoachieveitbynotdying"WoodyAllen"Peoplewillsoonlivetwiceaslongastoday,andhavethepotentialtolivefor1200years"JohnHarris,ScientistMemberofUKHumanGeneticsCommissionasreportedSundayTimes,25June2000Funeralfirmhitby29%profitfallNotenoughpeoplearedyingintheUS,accordingtoServiceCorporationInternational,theworld'slargestfuneralservicescompanyTimes,2October1999Scaleofopportunities

Peopleover65Source:USBureauoftheCensusAnnuityversusbondyieldIncometakenmonthlyinadvance;interestrate5%paAnnuityincomebrokendownintocapitalelementandthebalance(ieinterestelement)Optionsforretirementincome100%PensionerInvestmentGuaranteesPensioner

Survival

GuaranteesTraditionalAnnuityLump

Sum?©WatsonWyattPartners2000

0%0%Traditionalannuities

SomeimportantquestionsHowmuchdotheguaranteescost?Howvaluablearetheytocustomers?earlyinretirement/laterinretirement?accordingtootherassets?Howwilllifestylesandneedschangeinretirement?Willcustomerschangetheirmindsovertime?Keyissuesfordesign

ThePensionerChoice(investment)Flexibility(income)Protection(survival)Communication(tradeoffs)FailsafeAlifetimeassetallocationmodel

TraditionalEitherlumpsumOrannuityRetireRetireOptimumreturn

(equities?)Optimumreturn

(equities?)CashBondsBonds©WatsonWyattPartners2000

Alifetimeassetallocationmodel

ProposedOptimumreturn

(equities?)Optimumreturn

(equities?)BondsRetire©WatsonWyattPartners2000

Effectofinvestmentgrowthon

supportableincome-malesBaseincomesupportablecalculatedat5%.

Incomemultiple=incomesupportableassumingextrainvestmentreturnresultingfromequityinvestmentof1,2,3,4or5%paaftercharges,dividedbybaseincome.Mortalityaspreviously©WatsonWyattPartners2000

PlanningretirementincomeTheconsumerproblemis..... HowlongwillIlive?LifespanisadistributionnotanexpectationDistributionofdeaths

Retirementatage60Mortality:PMA92/PFA92Yearofuse2001©WatsonWyattPartners2000

DistributionofdeathsbyagenowAge75now©WatsonWyattPartners2000

Mortality:PMA92/PFA92Yearofuse2001DistributionofdeathsbyagenowAge90now©WatsonWyattPartners2000

Mortality:PMA92/PFA92Yearofuse2001Standarddeviationofdeaths,as

aproportionoflifeexpectancyMortality:PMA92/PFA92Yearofuse2001©WatsonWyattPartners2000

MethodofcalculationNon-annuitisedfundIncomeeachyeardefinedas:

Fundvalue/annuityfactorAnnuityfactorcalculatedatassumedinvestmentreturnof0%or7%pa(excludingexpenses)Investmentreturnachievedequalto7%pa(excludingexpenses)Investmentreturnassumed:(exclexpenses)Investmentreturnachieved:7%pa(exclexpenses)Mortality:PMA92Yearofuse2001Initialfund£100,000Maleaged60atoutset©WatsonWyattPartners2000Progressionofincome:

spreadingfundoverfuturelifeexpectationProgressionofincome-annuitisedfundversus

non-annuitisedfund Mortality:PMA92Yearofuse2001Maleaged60atoutset©WatsonWyattPartners2000

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