Pacific Odyssey Advantage Variable Annuity review

Yes, for the right buyer. This is a good annuity for someone who already works with Schwab, wants to add a tax-deferred wrapper around market-based investments, and does not want to accept a surrender period to do it. It is less compelling for someone who is not a Schwab client, someone who mainly wants guaranteed income from day one, or someone for whom the 0.45% base fee on top of subaccount costs is not justified by the tax-deferral benefit.

The main reason to buy Pacific Odyssey Advantage is tax deferral without the typical tradeoffs of a traditional variable annuity. Most VAs ask buyers to accept a surrender schedule — often 7 to 10 years — in exchange for the annuity wrapper. This product skips that entirely. The secondary reason is access to the optional income rider, which allows a buyer to start with a pure accumulation posture and add a guaranteed lifetime withdrawal feature if their planning priorities shift.

I think this annuity is best for a Schwab client in the pre-retirement accumulation phase who wants to shelter investment growth from current taxation and is not interested in paying for income guarantees they may not need. The no-surrender-charge design also makes it a reasonable fit for someone who appreciates having full liquidity from day one and wants to be able to exit without penalty if their situation changes. It is less attractive for buyers who want the simplest possible investment structure, who are not already inside the Schwab relationship, or who want to prioritize guaranteed income over market growth.

You are buying a tax-deferred investment account with an insurance wrapper. The underlying subaccounts hold mutual fund-style investments that can rise and fall with the market — there is no principal protection in the base contract. What the annuity provides is the tax-deferral mechanism, the ability to annuitize later, the optional riders, and the standard death benefit equal to account value. The real value proposition versus a taxable brokerage account is the deferred compounding of gains during the accumulation phase, offset by the 0.45% base fee plus subaccount costs.

Pacific Odyssey Advantage is an investment-based annuity. Premium is allocated across any combination of 102 variable subaccounts managed by well-known institutional managers including Schwab Asset Management, American Funds, BlackRock, PIMCO, Fidelity, T. Rowe Price, MFS, Invesco, and Pacific Life Fund Advisors, among others. Subaccount net expenses range from 0.03% (Schwab S&P 500 Index Portfolio) to 2.38% (PIMCO Commodity RealReturn Strategy Portfolio Advisor Class), giving buyers a wide range of cost levels depending on strategy.

The base contract charges 0.30% for mortality and expense risk plus 0.15% for administration — 0.45% total. Above $500,000, the M&E steps down to 0.25%, and above $1 million it steps down further to 0.20%. There are no surrender charges and no commission charges. The contract also offers dollar-cost averaging options: a 6% six-month DCA and a 3% twelve-month DCA for buyers who want to deploy a lump sum more gradually.

The optional Portfolio Income Benefit is the income rider. It guarantees annual withdrawals based on a Benefit Base that grows at 5% simple interest per year for up to 10 years before income begins — or until the first withdrawal other than advisory fee withdrawals up to 1.50%. After that accumulation period, the rider pays lifetime withdrawal percentages tied to the age at which income starts, ranging from 4.55% at ages 59.5–64 (single life) up to 9.70% at age 95 or older.

Annual automatic or owner-elected step-ups are also available — if account value grows enough to exceed the Benefit Base, the step-up captures that growth. Both single life and joint life options are available, with joint life paying roughly 0.50 percentage points less per age band. The current rider charge is 1.30% annually, deducted quarterly from account value but charged against the Benefit Base. The maximum permitted charge is 2.50%.

This rider is optional and must be elected at issue. Buyers who do not want the income guarantee skip it entirely and reduce total costs accordingly.

There are no surrender charges on Pacific Odyssey Advantage. Buyers have full access to their account value from day one without penalty. This is meaningfully different from most variable annuities, which impose 7 to 10-year surrender schedules.

If the Portfolio Income Benefit rider is in place, the rider defines what qualifies as an excess withdrawal — amounts above the guaranteed withdrawal payment will reduce the Benefit Base pro rata after income begins, or on a pro rata or dollar-for-dollar basis before income begins, whichever results in a lower Benefit Base. But that is a rider-specific rule, not a contract-level liquidity restriction. The underlying contract value itself can be accessed without a penalty charge.

The base contract fee of 0.45% is the foundation. On top of that comes the net expense ratio of whichever subaccounts are selected, ranging from 0.03% to 2.38%. A buyer using the low-cost Schwab S&P 500 Index Portfolio carries a total annual cost of roughly 0.48%. A buyer using actively managed specialty funds can push total costs well above 2.00% before any rider is added.

The optional Return of Purchase Payments Death Benefit adds 0.20%, bringing the base total to 0.65% before subaccount expenses. The optional Portfolio Income Benefit adds 1.30%, bringing the base total to 1.75% before subaccount expenses. A buyer who elects both optional benefits with a mid-cost active fund could easily be paying 2.50% to 3.00% in combined annual fees.

The no-surrender-charge design is the structural counterweight to these fees. Because there is no exit penalty, buyers who decide the fee load is too high can move out without a contractual cost. That is a meaningful advantage versus commission-based VAs that trap buyers in long surrender schedules.

Pacific Odyssey Advantage is issued by Pacific Life & Annuity Company (in New York and all other states) and Pacific Life Insurance Company (in all states except New York). Pacific Life is a large, established life insurance and annuity carrier. The AM Best rating for Pacific Life & Annuity Company is A+ and the S&P rating is AA-, which reflects strong financial strength. The contract is sold exclusively through Charles Schwab and is positioned within Schwab's advisory and brokerage platform. Variable products are distributed by Pacific Select Distributors, LLC.