Carriers continued to tinker with variable annuity contracts in the second quarter. According to a report from Morningstar, variable annuity (VA) carriers filed 182 changes in Q2, up from 97 in the first quarter and 168 in the same quarter a year earlier.
It comes as no surprise that Morningstar attributes this flurry of changes to protracted low interest rates that impede any chance of raising benefit levels. The firm characterizes the majority of changes as “low impact.” A deeper look into the changes highlighted in the Morningstar report finds that several involved fee hikes, benefit reductions in the form of lower lifetime withdrawal percentages and more sub-account options that veer toward lower volatility. Several carriers also tweaked the age bands on the lifetime withdrawal benefit.