South Africa's financial services group Sanlam has launched a structured life assurance product to take on traditional with-profit annuities, while providing investors with transparency as to how their returns are achieved.
Karen de Kock, head of annuity business at Sanlam structured solutions, said that in back-testing the product outperformed traditional with-profit annuities launched both by Sanlam and its competitors. De Kock told online portal Personal Finance that unlike black box with-profit products, the new product allow individual investors to calculate returns themselves.
Increases in Complete Picture Pension are based on the average returns of a basket of two indices, FTSE/JSE ALSI40 Total Return Index and the All Bond Total Return Index, over the past five years less an all-in product fee of 2.5% and the purchase discount rate, floored at zero and locked in annually.
According to Sanlam's calculations, the 50:50 split between equities and bonds has proven to be the 'optimal asset allocation' for a product of this type.
The purchase rate is set at 3% for new business quotations and between 3% and 5% for conversions to the fund or new entrants. Adviser commission is 1.5%.