BlackRock’s LifePath Paycheck, a target-date solution that combines retirement income, has quickly grown to be one of the largest lifetime income target-date strategies in the defined contribution (DC) market, the investment behemoth reported Monday.
The strategy closed the year with $16 billion in assets under management (AUM) and six employer retirement plans, including those of Avangrid, Adventist HealthCare Retirement Plans, Tennessee Valley Retirement System (TVARS), and BlackRock itself.
“As a pioneer in retirement innovation, BlackRock is creating new solutions for current and future generations of employees, many of whom are expected to live into the next century. LifePath Paycheck addresses the need for strategies that provide access to predictable, guaranteed income throughout retirement,” said Mark McCombe, vice chairman of BlackRock, in a statement.
BlackRock’s LifePath Paycheck first launched in April 2024 after Chairman and CEO Larry Fink announced the new product in a March letter to investors. The solution, which provides access to guaranteed income through a TDF, offers retirement income to participants as early as age 59½ by purchasing annuity contracts issued by Equitable and Brighthouse Financial. Those who buy the annuities are also not subject to additional fees.
“As I write this, 14 retirement plan sponsors are planning to make LifePath Paycheck available to 500,000 employees. I believe it will one day be the most used investment strategy in defined contribution plans,” Fink said in the letter. “We’re talking about a revolution in retirement.”
The solution comes as more workers fear the possibility of outliving their savings in retirement and express interest in lifetime income products. A retirement survey from American Century found that 92% of retirement savers voiced interest in using a portion of their 401(k)s at work to generate guaranteed lifetime income, with 25% adding that they were “extremely interested.”
Employers are also keen on retirement income products, as nearly all (99%) in a BlackRock survey conveyed interest in providing lifetime income strategies in their retirement plans.
Offering guaranteed lifetime income solutions has generally been seen as a recruitment and retention strategy among employers. A Nuveen survey found that plan sponsors are increasingly prioritizing retirement income strategies, with 49% listing it as one of their top three workplace priorities.
“The retirement savings and spending challenges of today’s workers will be different from those of previous decades,” said Rob Crothers, head of U.S. Retirement at BlackRock. “Forward thinking employers know that retirement income is a game changer in the war for talent.”
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