MGM Advantage Annual Cost of Living

ANNUAL COST OF LIVING FOR RETIRED HOUSEHOLDS INCREASES BY OVER £770 IN 12 MONTHS

Inflationary pressure highlights urgent need for a new generation of retirement income products, says MGM Advantage

As a result of rising inflation, MGM Advantage, the innovative retirement income specialist, estimates that the average retired household, where the main occupant is aged 65-74 years, needs to find an extra £774.70 a year to maintain the standard of living they enjoyed just 12 months ago1. The corresponding figure for a home where the main occupant is aged 75 years and over is £383.91 and the average for all households is £1,222.66.

MGM Advantage says that the growing cost of living in retirement means that the traditional conventional, fixed level annuity will become less appealing. Research has shown that a growing number of people are willing to accept an element of investment risk – providing there is an appropriate level of tailored protection - in order to give their retirement income the potential for growth to combat inflation.

One option is an asset backed annuity, which gives customers the potential to receive more income than through a conventional annuity. MGM Advantage’s Flexible Income Annuity provides the flexibility to change income levels at different stages of retirement and the potential for growth and therefore the potential to negate the impact of inflation. It also provides a minimum income guarantee and death benefits.

The flexibility of the product and the fact that the minimum investment is £10,000 means it is suitable for the majority of UK consumers who are willing to accept an element of investment risk on some of their pension savings, providing they have a minimum income guarantee to rely on. Low annual management charges and a simple range of investment funds to choose from will make the product attractive to a previously poorly-served group of retirees.

Aston Goodey, Sales and Marketing Director, MGM Advantage comments: “January saw the biggest year on year Consumer Price Index (‘CPI’) increase since records began which is having a dramatic impact on the income available to those in retirement. Until recently, conventional fixed level annuities have been popular as the “safe” option at retirement because they offer a guaranteed fixed income for life. However, the risk of not inflation-proofing their income is making more people explore alternative solutions.

Aston Goodey continues, “More needs to be done across the industry to improve the choice for people at retirement, and we believe investment-linked annuities have an important role to play. Our new Flexible Income Annuity provides the opportunity for growth and protection against inflation, along with a minimum income guarantee that provides the level of security that people want when they’re planning their income for the rest of their lives.”

The new Flexible Income Annuity is the first in the UK to offer access to Vanguard funds within an annuity wrapper, as well as a choice of market leading actively managed funds from Jupiter, Newton and JP Morgan Asset Management, all of which have been selected by Old Broad Street Research. A cash fund is also available from Insight Investment.

Product Details – MGM Advantage Flexible Income Annuity

A lifetime annuity that offers a choice of starting income between 50% and 120% of the income that would be available from a conventional annuity
The flexibility to vary income at key stages of retirement to meet lifestyle needs
A choice of market leading actively managed funds from Jupiter, Newton, JP Morgan Asset Management, selected and monitored by Old Broad Street Research (OBSR)
A choice of passive funds using funds from Vanguard – MGM Advantage is the first provider in the UK to offer Vanguard funds within an annuity wrapper. A cash fund is also available from Insight Investment.
Enhanced terms for customers with a health impairment
Because we’re a mutual, membership of the Society and the potential for extra income from member bonuses, without the need to invest in a traditional with-profits fund
The usual mortality cross-subsidy benefits offered by annuities but not possible with income drawdown
Income fixed for five year periods so people can plan their finances more easily
Automatic five-year income reviews, but also the option for customers to make changes to income levels and investment choices at any time if required
A Minimum Income Guarantee from day one
The option to move to a fixed income basis or to another provider at any time
Death benefits and all the other features you’d expect from a conventional lifetime annuity.
The Flexible Income Annuity is sold through independent financial advisers

- Ends -

For further information:

Citigate Dewe Rogerson

Phil Anderson 020 7282 1031

Alistair Kellie 020 7282 2850

Jo Skinner 020 7282 1092

Sophie Woodcock 020 7282 1072

Notes to editors

(1) Based on MGM Advantage analysis of the latest available ONS Family Spending Report (2009) and Consumer Price Index in January 2010.

About MGM Advantage

www.mgmadvantage.com

History: Based in Sussex, the life assurer opened its doors in 1852 as Marine and General Mutual Life Assurance Society, to fill the poorly-met insurance needs of seafarers and traders.

MGM Advantage is a new name in the UK retirement income market. Formerly known as MGM Assurance, the company rebranded as MGM Advantage, Designs for Retirement in June 2008 and repositioned the company as a retirement income specialist.

Its launch product – an Enhanced Annuity – is designed to provide additional income in retirement for people with any health conditions or a poor medical history and is distributed through independent financial advisers (IFAs) across the UK.

MGM Advantage is a mutual society owned by its members, and manages assets in excess of £1.4 billion. MGM Advantage’s commitment to customer satisfaction is backed up by an industry-leading customer charter, which promises high quality service and a £25 no-quibble payment to any customer who hasn’t received the level of service they expected.

MGM Advantage Designs for Retirement, MGM Advantage and the MGM Assurance logos are Trade Marks of Marine and General Mutual Life Assurance Society.