The living bonus is a payment made to all Mercer LifetimePlus® investors every six months, just for living longer.
The size of your living bonus depends on your age, gender, investment amount and how long you’ve been invested in Mercer LifetimePlus. So, the older you are and the longer you have been invested, the higher your living bonus.
When When an investor in Mercer LifetimePlus withdraws or passes away, a withdrawal fee is deducted from their investment in Mercer LifetimePlus. The balance of their investment is then paid back to them or their estate.
This withdrawal fee is then paid directly into the Mercer LifetimePlus living bonus pool. Every 6 months the living bonus pool is divided up and a living bonus is paid to each remaining investor.
This is what we call longevity risk sharing, which is a concept similar to that used in insurance products. Those who need it are supported by those who don’t need it.
For example, let’s consider a group of six investors. One of those investors, Mark, passes away.
The diagram below illustrates how his exit contributes to the total living bonus pool for that period.
1. Mark’s money is withdrawn from Mercer LifetimePlus; 95% of his initial investment is paid to his beneficiaries while 5% is retained.
2. The 5% that is left behind forms part of the living bonus pool that comprises Mark's 5% and deductions from the other investors who have left.
3. Each active investor receives a share of the living bonus pool based on their age, sex, amount invested and duration of their investment. The living bonus pool is distributed in full to all active investors every six months.
NB: For simplicity the above example assumes that all investors invested the same amount in Mercer LifetimePlus when they were 65 years old. The proportions of the living bonus pool distributed to active investors are for illustration purpose only.