Personal Income Annuity (NY) review

It depends. For a New York resident working with a Fidelity advisor who specifically wants a guaranteed-income rider over a balanced portfolio at a low base cost, it is a reasonable fit. For someone who wants real investment choice inside a variable annuity, or who lives outside New York, it is not — the menu is too thin and the product simply is not available elsewhere.

The main reason to buy this is the combination of a low 0.90% M&E charge and the optional Nationwide Retirement Income Rider NY II, which builds a benefit base at 5% simple interest for up to 10 years and then pays a lifetime income percentage that climbs with your age. For a buyer who wants market-linked growth potential with a downstream income guarantee, and who is fine letting a single balanced portfolio drive returns, the structure is coherent. The short 5-year surrender period is also genuinely unusual for a variable annuity and lowers the commitment compared with the 7-year-plus schedules common in the category.

I think this is best for a New York resident in or approaching retirement who is working through a Fidelity advisor, wants a guaranteed-income floor, and does not want to pay the higher M&E charges typical of richer variable annuities. The income rider issue ages run 50-80, with income commencement available at 59.5, so it skews toward pre-retirees and retirees. It is a poor fit for anyone who wants to build their own subaccount portfolio, anyone who does not want the income rider (a low-cost balanced fund in a brokerage account would do the same job more cheaply), and anyone outside New York, since the contract is not approved in any other state.

Strip away the name and this is a tax-deferred wrapper around the Fidelity VIP FundsManager 60% portfolio — a roughly 60/40 stock-and-bond fund — with an optional lifetime income guarantee on top. The brochure lists two subaccounts, but the second is a government money market fund that the materials note is not available for direct allocation, so it functions as a holding account rather than a real investment choice. That means the investment decision has effectively already been made for you. You are buying the income guarantee and the tax deferral, not a flexible investment platform.

The headline feature is the optional Nationwide Retirement Income Rider NY II, a guaranteed lifetime withdrawal benefit. It carries a 1.30% annual fee charged on the benefit base, and the benefit base grows at 5% simple interest each year for up to 10 years before you turn income on. Once you start income, the contract pays a percentage of the benefit base for life. Those payout percentages scale with age at activation: at ages 59.5-64 the single-life rate is 5.35%, rising to 6.25% at 65-69, 7.00% at 70-74, 7.60% at 75-79, and higher still into your eighties and nineties. Joint-life rates run roughly half a point lower. Importantly, the simple-interest roll-up means the benefit base grows by a flat 5% of your starting amount each year — not 5% compounded — so the longer you defer, the more the gap between simple and compound growth matters.

The secondary feature is the cost structure itself. A 0.90% M&E charge is low for a variable annuity, and the underlying portfolio expense is modest (0.66% net for the balanced fund). Add the 1.30% rider fee and you are around 2.86% all-in if you elect income — meaningful, but not extreme for a guaranteed-income variable annuity. If you skip the rider, the all-in cost drops to roughly 1.56%, which is genuinely competitive. The short 5-year, 2%-flat surrender schedule reinforces this lean profile and makes the contract easier to exit than most variable annuities.

The surrender schedule is short and shallow: a flat 2% charge for the first five contract years, then zero. There is no market value adjustment, which removes a layer of unpredictability common in fixed and indexed products. You can withdraw 10% of remaining premium penalty-free starting immediately, which is more generous than the typical after-year-one structure. The catch is the income rider: withdrawals taken before you commence income reduce the benefit base pro rata, and excess withdrawals after income starts also reduce it pro rata — and if an excess withdrawal drives the account value to zero, the rider terminates. The rider also cannot be cancelled at your request once elected, so the 1.30% fee is a long-term commitment. RMD treatment was not specified in the available materials, so confirm how required distributions interact with the rider before relying on it.

There are three cost layers. The base contract carries a 0.90% M&E charge assessed daily on the subaccount. The underlying balanced portfolio costs about 0.66% net. And the optional income rider adds 1.30% annually on the benefit base. The trade is straightforward: the 1.30% rider fee buys a 5% simple roll-up and a lifetime payout — worth it only if you actually turn income on and live long enough to benefit. If you elect the rider but never activate income, you are paying for a guarantee you never use. The bigger structural tradeoff is the investment menu: with one usable subaccount, you cannot tilt more aggressive or more conservative, and you cannot diversify across managers. You are committing to the FundsManager 60% allocation, full stop.

Legal Entity: Nationwide Life Insurance Company

Parent: Nationwide Financial

A.M. Best Rating: A+