AIA Retirement Saver (IV) offers a lot of possibilities if you are planning for a good life during your retirement.
It’s an annuity policy that enables you to receive guaranteed and non-guaranteed income during your retirement.
It’s also packed with multiple features such as flexible premium payment options and optional riders.
Here, we have a comprehensive analysis of AIA Retirement Saver (IV) including features, benefits, and everything else you need to know.
Read on.
Criteria
Because AIA Retirement Saver (IV) helps you in meeting your retirement goals, you can choose your preferred monthly income as well as the age you want to receive the money (starting at 50).
As well, the plan offers this monthly income to you over 15 or 20 years.
Features
AIA Retirement Saver IV has numerous features that you can explore when looking for an annuity plan to cover your needs during retirement.
Premium Payment Options
There are 2 options through which you can make premiums either single premium payment or regular payments.
Therefore, you can choose to pay a single lump-sum payment or spread the payments over 5 or 10 years whichever option best suits you.
In addition, premiums are payable up to 5 years before the accumulation period ends.
Likewise, SRS payments are available which means you can pay with your SRS accounts.
Like most other policies, regular premiums can be paid monthly, quarterly, biannually, or yearly.
Payout Options
With this plan, you can choose to receive your monthly retirement payout over 15 or 20 years.
In addition, you can choose when to receive your retirement income either at ages; 50, 55, 60, 65, or 70.
After you retire you can receive your payouts as a single amount or monthly income.
Any debts you owe the policy will be deducted before the payouts commence.
Capital Guaranteed
One unique thing about AIA Retirement Saver (IV) is that it offers a capital guarantee such that you’ll get back your money when you attain your selected retirement plan.
Non-Guaranteed Dividends Or Bonuses
The plan cushions your savings against external market forces such as inflation thereby enhancing your monthly income in the form of dividends or bonuses which will be paid during your preferred retirement
Thus, there’s a possibility of your retirement income increasing by 5% every year.
However, with all non-guaranteed features, it’s best to take this with a pinch of salt.
Maturity Bonus
With AIA Retirement Saver (IV), you can get a one-time lump sum payment when you make a claim, during surrender, or maturity.
The expected rate of return is 4.17% per year upon maturity.
Premium Pass Option
You can enjoy 12 months of interest-free duration with the Premium Pass Option that lets you defer premiums in case of disruptions such as job losses.
Notably, this option is only available if the job loss is involuntary and all your premium payments have been regular for three years.
No Medical Underwriting
You can purchase AIA Retirement Saver (IV) regardless of your health condition since a medical check-up is not mandatory unless you’re taking up additional riders.
Protection
The AIA Retirement Saver (IV) guarantees income in your golden years. The table below summarises the benefits and what you can expect from this policy.
Summary of features
| Cash and Cash Withdrawal Benefits | |
| Cash value | Available |
| Cash withdrawal benefits | Available |
| Health and Insurance Coverage | |
| Death Coverage | Available |
| Total Permanent Disability | Not available |
| Terminal Illness | Not available |
| Critical Illness | Not available |
| Early Critical Illness | Not available |
| Health and Insurance Coverage Multiplier | |
| Death | Not available |
| Total Permanent Disability | Not available |
| Terminal Illness | Not available |
| Critical Illness | Not available |
| Early Critical Illness | Not available |
| Optional Add-on Riders | |
| Early Critical Protector Waiver of Premium | Available |
| Critical Protector Waiver of Premium | Available |
| Other Benefits | |
| Premium Payment Deferment | Available |
| Non-guaranteed bonuses | Available |
Death
Like with other annuities, AIA Retirement Saver (IV) offers coverage in case of death.
If death occurs, the policy automatically terminates.
However, it doesn’t offer coverage against Total and Permanent Disability.
Optional Add-On Riders
You can enhance your plan by choosing additional riders such as;
Critical Protector Waiver of Premium III
In this regard, the premiums are waived if you get diagnosed with up to 72 major stage critical illnesses such as heart disease or cancer.
Therefore you can focus on getting well instead of stressing about premium payments.
Early Critical Protector Waiver of Premium (II)
With this rider, the future premiums are taken care of if you are diagnosed with up to 149 multi-stage CIs.
AIA Retirement Saver (IV) Key Highlights
AIA Retirement Saver (IV) is suitable for you if you are looking for a policy that;
- Offers medium to long-term wealth growth.
- Provides guaranteed retirement payouts throughout a certain period.
- Secures a monthly retirement income starting from the preferred date of your retirement for over 15 years.
- Offers a medium to long-term savings period vai the 5 or 10 years premium term.
- Offers guaranteed cash benefits during retirement.
- If you don’t require access to your savings before retirement.
However, it may not be a suitable option for you in the following circumstances;
- Does not offer insurance protection and coverage.
- Does not offer income payouts in case of disability.
- Doesn’t have a high surrender value in the early years
Illustration
To understand how AIA Retirement Saver(IV) works, here are some examples to illustrate.
Assuming two individuals Paul and Jackson decide to take up AIA Retirement Saver (IV) policy. Paul is 45 years old whereas Jackson is 55 years.
Both gentlemen expect to receive a retirement payout of S$1,000 per month upon reaching 65 years.
Example 1 Paul’s Case
Paul would like to start receiving his retirement payouts for twenty years. Also, he would like regular premium payments spread over a 20 years period.
In this regard, the total premiums paid will be S$207,150 and he will enjoy a 100% Capital Guarantee when he reaches 65 years.
At age 50, the unexpected happens and Paul is retrenched. In this instance, he chooses the Premium Pass Option and subsequently defers the premium payments for 12 months.
Thus, his plan will remain in force despite the disruption.
At 65 years, Paul starts receiving his monthly retirement income. By 87 years, he will have received a total of;
| Guaranteed retirement income for 20 years (1000x12x20) | S$240,000 |
| Additional retirement income or expected dividends (Assuming a total yield at maturity of 3.68%p.a) | S$137,810 |
| Expected lump sum terminal dividend (bonus) at age 85 | S$149,360 |
Example 2 – Jackson’s case
Jackson would like to receive his monthly retirement income spread out across 15 years. He also chooses to pay a single premium as opposed to regular premiums.
The total premium paid as a single payment is S$158,710. Just like Paul’s case, Jackson enjoys a 100% capital guarantee at 65.
At 65 years, Jackson will start receiving his monthly retirement income as shown in the table below.
| Guaranteed retirement income for 15 years (1000x12x15) | S$180,000 |
| Additional retirement income or expected dividends ( Assuming a total yield at maturity of 3.52%p.a) | S$61,630 |
| Expected lump sum terminal dividend(bonus) at age 80 | S$63,140 |
Notably, the calculations are based on the following assumptions;
- An illustrated rate of return of 4.25% per annum.
My Opinion of AIA Retirement Saver(IV)
Your retirement or annuity plan should supplement your income when you retire from active employment. When choosing such a plan, you want to be sure that it matches your financial milestones in years to come.
Even though AIA Retirement Saver (IV) scores poorly when it comes to the availability of features, it’s an excellent plan with one of the highest expected returns on the industry.
Comparing AIA Retirement Saver (IV) with other plans
To help you make a sound decision, we have prepared a table comparing AIA Retirement Saver (IV) with other annuity options on the market.
Subject to;
- Entry Age, premium payment term and accumulation period less than or equal to 80 ANB
- Additional payout plus basic monthly payout
- All policies payable in cash
All plans are geared towards providing financial security in your golden years when you take a step back from work.
However, there are some significant differences when you compare the policies.
For instance, they may differ in terms of the payout period, date when the accumulation period commences, frequency of payouts or premium terms.
One positive thing about the AIA Retirement Saver(IV) is that it allows single premium payments as well as regular options.
However, its major drawback is that it lacks important features such as Total and Permanent Disability Benefit and Terminal Illness Benefit.
Worth noting, these are some of the most important features that most individuals would consider when looking for a retirement plan.
Also, there is no option to reinvest your payouts after the end of an accumulation period.
Despite this, My AIA Retirement Saver (IV) has one of the highest returns in the industry as shown in the table below.
Comparing Returns
Notably, the total yield which is a non-guaranteed payout is based on the illustrated investment rate of return of 4.25% p.a for all the policies except PRUActive Retirement (II) whose illustration rate is 4.00%.
Also, the calculations are based on the assumption that you will receive your retirement income alongside monthly dividends or bonuses.
From the table, it’s clear that the total expected returns for AIA Retirement Saver (IV) are the highest.
In addition, the non-guaranteed returns are highest when you compare them to the other annuity plans.
However, do take note that non-guaranteed returns are… non-guaranteed.
As well, the guaranteed returns are lower than Prudential’s PRUActive Retirement (II) and NTUC Income’s Gro Retire Flex.
No single annuity plan is the best because individual needs may differ.
Depending on your needs, we’ve listed the best retirement annuity plans in Singapore here.
If you’re still unsure, you can contact a financial advisor who will help you decide on what plan is best for you.
Reference
https://www.aia.com.sg/en/our-products/savings/aia-retirement-saver-iv.html
