Low interest rates have forced Manulife Financial Corp. to reduce features offered on its guaranteed minimum withdrawal benefit products.
Starting April 30, the firm will reduce its income payout percentage on Manulife Pension Builder, a segregated fund that has a features cashable lifetime annuity, by 75 basis points, pending on the age the client begins making withdrawals.
The payout percentages offered on Manulife GIF Select IncomePlus, a variable annuity product with a savings component that offers clients a lifetime stream of income at retirement, will fall by 100 basis points at ages 55, 65 and 75. Thus, the withdrawal payout percentage for a client retiring at age 65 will fall to 4% from 5%.
In addition, the firm added two new ages at which clients can begin making withdrawals. A person can receive a withdrawal payout percentage of 3.5% at age 60, or 4.25% at age 70. The deferral bonus offered to clients on IncomePlus will remain at 5%.
Manulife was the first of the Canadian insurers to introduce GMWBs in 2006. Since then, it has revamped and re-engineered the products a number of times. No changes have been made to its InvestmentPlus or EstatePlus products.
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Correction: An earlier version of this article erroneously stated the income bonus on Manulife GIF Select IncomePlus had been reduced to 4% from 5%. It is the withdrawal payout percentage for a client retiring at age 65 that will fall to 4% from 5%.