AMP cuts North Guarantee costs

AMP’s director, superannuation and investment platforms, Patricia Montague said increases in long-term interest rates mean AMP is able to offer new customers the guarantee more cheaply.

According to Ms Montague, economic and market factors such as long-term interest rates and market volatility are used to determine the price of the guarantee.

“Life expectancy is on the rise and there is a real risk that a market downturn could wipe out the savings of retirees or those close to retirement, who will also have a longer retirement to fund. The effect of sequencing risk can be damaging,” she said.

“The options available under the Guarantee mean a customer can ensure they will lock in income for life, regardless of market conditions.”

Ms Montague said that while the reduced costs makes the North Guarantee option “more attractive”, providing customers with the opportunity to protect themselves from market volatility close to retirement is “priceless”.

The North platform was a growth driver in AMP’s recent first quarter cash flows, with $1 billion in net cash flows for the quarter and approximately 10 per cent of flows directed towards the North Guarantee.

North AUM grew to $10.7 billion as at the end of March 2014.