Guaranteed minimum withdrawal benefit products (GMWBs) act as personal pension plans, some insurers say. "We believe that the continuing decline in defined benefit plans is not going to reverse itself anytime soon," Michael Ondercin of Manulife Financial points out. He adds that GMWB products can be an alternative for investors without a pension plan. This is why Manulife predicts that this product category should prosper in the coming years.
"This product fulfills an important need for people approaching retirement," he explains.
Rocco Taglioni, of Sun Life Financial, agrees that GMWB products offer similar advantages to pensions. He adds that as the population ages, more and more people will opt for GMWBs. "Baby-boomers are now at a stage of their life where retirement income becomes an important factor to consider when analyzing their needs," he says.