OTHER HYBRIDS

Other providers offer the opposite type of hybrid: a living annuity with a guaranteed component. With a living annuity, you choose the underlying investments and how much to draw down from your capital each year. Guarantees add extra costs.

Liberty’s Bold Living Annuity, launched last year, features a five-year 80% high-water-mark return guarantee, measured each quarter, which can be rolled over after five years. You are guaranteed 80% of the highest aggregated return from the outset, for the five-year period. For example, on day one you don’t have any return, and your initial return guarantee is -20%. If your overall return in the first two years is 25%, and markets go negative after that, you will be guaranteed an overall return of 0% for the five year-period. This is because 80% of the 25% return (20%) becomes your guaranteed return, which must be added to your initial guaranteed return (-20%)

With Discovery’s Guaranteed Escalator Annuity, your savings are invested in your choice of Annuity Escalator Funds. Discovery’s website says these funds are designed to provide unlimited upside potential in bull markets, while offering downside protection in bear markets. You are protected at a guaranteed unit price of at least 80% of the highest value the Annuity Escalator Fund has reached.

OTHER OFFERINGS

Alexander Forbes has the Lifestage Annuity, which allows you to switch out of a living annuity into a guaranteed one at an optimal point, and Sanlam’s Glacier investment platform offers the Investment Linked Lifetime Income Plan, in which a guaranteed number of units provides a guaranteed income.