Washington, D.C., (August 9, 2015) – New research finds that most people who either take a partial withdrawal or cash-in their variable annuities entirely face no fee on the transaction.

Conducted by NERA Economic Consulting for the American Council of Life Insurers (ACLI), a Washington, D.C.-based trade association representing an industry protecting the financial and retirement security of 75 million American families, the research shows that most people own their variable annuities for many years.

“Life insurers design variable annuities to be held for long-term retirement planning purposes. This survey shows they are largely being used for their intended purpose,” said ACLI Vice President of Research Andrew Melnyk.

Variable annuity surrender charges typically decrease annually, often starting at seven percent of the accumulated value of the contract in the first year and vanishing to zero in the seventh year. Among those contract owners who do pay a fee, the average is less than one percent, Melnyk said, who added that more than 18 million variable annuities are in force today.

Variable annuities are retirement savings tools underwritten solely by life insurers. Among many things, they protect savings through guarantees, including an option to receive income for life, that provide retirees with peace of mind.

The report also found:

• For full surrender of contracts, the average fee paid is 1.5 percent;
• For partial surrender of contracts, the average fee is 0.4 percent;
• At least 10 of the 13 firms that participated in the study offer contracts that include no surrender charges. And, all of the firms in the sample that offer policies with surrender charges allow contract holders to withdraw some percentage of their account balance each year with no fee.

“One data point makes it especially clear that fees on surrenders are low. It shows that in dollar terms, the average amount paid for a full surrender is approximately $750 on an average surrender amount of $100,000,” Melnyk said.

The research represents the first NERA report for ACLI on variable annuities, with further research slated based on the data recently gathered from ACLI member company survey participants.

The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association with approximately 300 member companies operating in the United States and abroad. ACLI advocates in federal, state, and international forums for public policy that supports the industry marketplace and the 75 million American families that rely on life insurers’ products for financial and retirement security. ACLI members offer life insurance, annuities, retirement plans, long-term care and disability income insurance, and reinsurance, representing more than 90 percent of industry assets and premiums. Learn more at www.acli.com.