Penn Mutual Annuities Review

The Guaranteed Foundation Fixed Annuity is designed to provide a lifetime income stream along with a guaranteed interest rate that can span from 1% to 3%. So if you’ve amassed a sizable nest egg but you’re concerned that market volatility could erode your savings, this product may be right for you. Annuitants can sign up for this contract with a minimum premium of $10,000. But the more you invest, the higher your interest rate would be. Penn Mutual has the following rate bands:

• $10,000 - $99,999
• $100,000 - $2 million

This annuity also allows your money to grow tax-deferred. This means you won’t pay taxes on your earnings until you withdraw your money in retirement. And your account gets the full benefit of compound interest. In fact, the company credits interest daily. 

You can sign up for a Guaranteed Foundation Fixed Annuity for a period of 5 or 10 years. During this time period, your interest rate would be locked in. And you can renew your contract at the end of the guaranteed period. And if you have retirement savings in other vehicles such as individual retirement accounts (IRAs), you can consolidate them all into one account under your annuity contract. 

Plus, you always have access to your funds. You may withdraw up to 10% of your account’s value without incurring a withdrawal fee from Penn Mutual. And during the last 30 days of each guarantee period, you have a few options regarding what happens to your contract. You can renew it for another year or a longer period, begin taking pension-like income payments or take a full or partial withdrawal of the contract value without facing surrender charges. 

Fees 

There are no annual contract fees associated with the Guaranteed Foundation Fixed Annuity. However, Penn Mutual would charge a withdrawal fee if you access more than 10% of your account value. The current withdraw fee schedules for this annuity are: 

In addition, the IRS will levy a 10% penalty tax if you take your money out before reaching age 59.5.

Realistic Return Expectations 

With this type of annuity, your account earns interest based on a fixed rate that's provided to you by Penn Mutual. Make sure that the rate you receive will pace you well with inflation. If not, a certificate of deposit (CD) could be a good alternative, as they feature stronger liquidity than an annuity.

If you’re not so risk averse and you want the opportunity to invest in the markets in order to grow your account, you may be interested in the Smart Foundation Variable Annuity. This account allows you to invest in a variety of equity funds that offer exposure to several asset classes and industry sectors. You can also invest in one of five Lifestyle Asset Allocation funds based on your risk tolerance. These diversified portfolios are run by Penn Mutual Asset Management and are automatically rebalanced each quarter in order to accurately reflect its predetermined risk profile. 

In addition, you can also protect part of your principal by taking out an account that offers a fixed interest rate for periods of three, five or seven years. The minimum initial premium for this annuity is $10,000 and the maximum is $2 million. 

To secure your savings, Penn Mutual also offers various benefit riders. For instance, the company can provide you with inflation protection. Your interest rate can move upward according to changes in the Consumer Price Index. So your rate can climb to as much as 6%. Moreover, a guaranteed minimum accumulation benefit ensures that the money you invested in the first contract year is returned to you at the end of 10 years regardless of market outcomes. 

When you’re ready to begin taking your cash, you have the following benefit options: 

• Periodic income payments over a certain number of years
• Guaranteed income payments for life
• Income payments for single or joint owners

In addition, Penn Mutual offers a death benefit for all its Smart Foundation Variable annuities. This rider provides your beneficiary with the greater of premiums paid or account value. The beneficiary can also continue the contract under current terms. An enhanced death benefit allows your beneficiary to get the highest anniversary contract value, net of withdrawal. 

Fees 

Because you’ll be invested in various funds through this variable annuity, your account will incur various fees. For instance, every fund has an expense ratio or management expenses. Funds available through these annuities have expense ratios that generally range from 0.36% to 1.29%. There's also a $40 annual contract fee and combined mortality and expense risk and administrative fees that can vary from 1.40% to 1.65%.

Depending on which Smart Foundation variable annuity you choose to open, your charges for withdrawals beyond the allowed amount will vary. They go as follows:

And if you make any withdrawal before reaching age 59.5, the IRS may levy a 10% early withdrawal penalty. 

Realistic Return Expectations 

With this annuity, your returns depend largely on the performance of your investments. You should discuss your options with your financial advisor in order to pick a portfolio that adheres to your risk tolerance and retirement savings goals.

The Premier Foundation Indexed Annuity by Penn Mutual ties your account to the performance of broadly diversified market indexes composed of major stocks. But even if the index underperforms one year, you won’t lose money. Plus, interest is credited and locked in at the end of each contract year. This ensures you don’t lose gains from previous years. 

With the Premier Foundation Indexed Annuity, you have the option to invest in the S&P 500 or the S&P Global Broad Market Index. In either case, your earnings grow tax deferred. So your money can make the most out of compound interest, and you won’t owe taxes on your earnings until you make qualified withdrawals at retirement. Penn Mutual also guarantees a lifetime stream of income in retirement, regardless of market performance, as long as the company remains financially stable. 

When you’re finally ready to retire, you can convert your accumulated balance into a regular income stream. You can also choose to receive periodic payments for a select number of years or a lifetime. 

This indexed annuity also comes with a death benefit that pays your beneficiary the greater of the contract value or the Minimum Guaranteed Surrender Value (MGSV). This is a percentage of your initial payment, less withdrawals, plus growth at an annual interest rate between 1% and 3%. Your beneficiary can also opt in to continue the contract under current terms. 

For additional costs, you can add the following benefit riders:

• Guaranteed Withdrawal Benefit: Ensures the amount used to calculate what you’d get in retirement keeps growing until you begin taking withdrawals. 
• Inflation Security Withdrawal Benefit: Your interest is adjusted to inflation based on positive movements in the consumer price index.

Despite the performance of the indexes your annuity tracks, Penn Mutual sets rate caps. This means there is a limit to how much you can earn an interest even when an index does exceptionally well. The company does not disclose these caps to the general public, so you’d have to discuss these terms with an agent.

Fees

There are no annual contract fees linked to the Penn Mutual indexed annuity. However, you’d get hit with a withdrawal charge fee if you access more than 10% of your account value. The firm doesn't publish the surrender fee schedule for this annuity.

The IRS may aloso levy a 10% federal tax on the withdrawal if you take it before reaching age 59.5.

Realistic Return Expectations

The return on your Premier Foundation Indexed Annuity depends on the performance of the index you’re tracking. So if it outperforms by 6% one year, that would be your interest rate. But even if the index dips to the negative, you won’t lose money due to the protections provided by Penn Mutual. Still, the company imposes rate caps. That means that if the index beats the rate cap, you’d get the rate cap as interest.

If you’re in retirement or very close to it, you may be interested in a single premium immediate annuity (SPIA). You can fund it with existing retirement savings in order to get a steady stream of income for life. And you can begin taking payments immediately or defer them for up to a year. You have the options to take these monthly, quarterly or annually.

The minimum initial premium required under this contract is $10,000 and the maximum is $3 million. Penn Mutual also offers an optional rider that protects your savings in the face of rising inflation. Your interest rate could be increased based on changes to the Cost of Living Adjustments (COLA) benefit.

The maximum issue age is 85. When you want to take payments, you have the payout following options:

• Life Only
• Certain Only
• Life with Period Certain
• Life with Installment Refund:

Fees

There are no annual contract fees linked to Penn Mutual’s immediate annuity. However, you may face withdrawal charges based on the following schedule. Penn Mutual doesn't publish its surrender charge schedule for this product.

The IRS may also levy a 10% early withdrawal tax if you take your money before reaching age 59.5. 

Realistic Return Expectations

The return on your immediate annuity depends largely on the amount you initially invest as well as your payout option. The only way you could make more money than you put in is if you choose lifetime payments and you outlive your initial premium amount.