Press Room
Press Release

FOR IMMEDIATE RELEASE | February 5, 2002
CONTACT: Deborah Tucker, (703) 707-8830 ext. 15 or dtucker@navanet.org

NAVA Releases Study Showing Value of Annuitization

Reston, VA, February 5, 2002 - NAVA, the leading trade association for the variable annuity industry, has commissioned a report by PricewaterhouseCoopers LLP (PwC) on the value of lifetime annuity distributions. The report, released this week compares, on an after-tax basis, lifetime annuity income with maximum mutual fund distributions consistent with a specified risk of outliving fund assets. To order a copy of the report visit NAVA’s website (www.navanet.org).

The analysis demonstrates that lifetime annuitization provides larger after-tax annual payouts regardless of the age at which the owners funded their investments. For example, the study finds that for the average variable annuity and mutual fund investment purchased at age 65, the after-tax income from an immediate lifetime annuity exceeds that from a mutual fund (with a five-percent risk of outliving fund assets) by over 30 percent. The excess increases to almost 95 percent if the investment is made at age 40 (with distributions starting at age 65).

"As more and more Americans reach retirement age, the importance of comparing the different investment options for a secure retirement will take center stage. I would hope that brokers, agents, and financial planners will review the report as it shows the real value that lifetime annuitization can provide their clients," noted Mark Mackey, President and CEO of NAVA.

"Annuity investors can eliminate the risk of outliving their wealth by electing to receive a life-contingent annuity, which guarantees an income that will continue for as long as they live. To reduce the risk of outliving assets to an acceptable level while maintaining level distributions, mutual fund investors have to limit withdrawals of principal more than is commonly realized," said Peter Merrill, Director of PwC’s National Economic Consulting Group and author of the report.

NAVA is a non-profit trade association located in suburban Washington D.C. The association provides a variety of services to the industry including educational forums, research, conferences, and lobbying activities aimed at furthering the development of fixed and variable annuities, income annuities and variable life insurance. NAVA also maintains and supports an educational website for consumers at www.RetireOnYourTerms.com. Founded in 1991, NAVA has a broad-based constituency, with over 350 members representing over 98 percent of the industry.