NTUC Income now offers the participating annuity. It offers a guaranteed payout which is increased each year by a variable bonus. The bonus is usually about 2.5% per annum, but is not guaranteed. In most years, it should vary from 1% to 4%.
A male at 62 investing in this annuity will get a return of 6.3% plus bonus. If he invest $100,000, the payout is $524 per month. This will increase with the yearly bonus.
Assuming the bonus is 2.5% per year, the annuity will increase to $671 after 10 years and $859 after 20 years.
Some policyholders have asked us to provide a higher payout in the earlier years. One option is for us to offer an adjustible annuity. It will pay $660 a month, of which $524 is guaranteed and $136 is adjustible.
If the average return on our investments is 5% per annum, the annuity will remain the same. If the average return is higher than 5%, we will adjust the annuity upwards. If it is lower than 5%, it will be adjusted downwards, but will not be less than the guaranteed floor of $524.
We will make gradual adjustment, by looking at the average return over a few years.
We have not yet decided to offer the adjustible annuity at this time. If there is sufficient interest, we may offer it in the future.
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