Fidelity Expanding TDF Lineup with Addition of Guaranteed Income Solution by Early 2027
Fidelity Investments today announced plans to launch a suite of target date collective investment trusts (CITs) with a built-in guaranteed income option, which will be available on the target date pioneer’s recordkeeping platform in early 2027.
Called “Fidelity Freedom Lifetime,” the company said the new suite will leverage Fidelity’s time-tested target date strategy that has helped millions of Americans save for retirement for more than 30 years, combined with the option to convert a portion of an employee’s target date balance into guaranteed lifetime income.
“In designing Freedom Lifetime, our priority was to maximize the value of lifetime income while keeping the participant and plan sponsor experience simple and easy to adopt.”
Fidelity’s Molly Cunningham
The Freedom Lifetime suite will include a strategic allocation to an insurance pool through Nationwide and New York Life—two highly rated insurers with deep expertise in delivering guaranteed income solutions. This exposure will allow employees participating in employer retirement plans, particularly those nearing and in retirement, to elect to receive a guaranteed lifetime income stream designed to create predictable income throughout retirement.
“Increasingly, employees are looking for more clarity in their retirement income streams,” said Molly Cunningham, head of Workplace Lifetime Financial Help. “In designing Freedom Lifetime, our priority was to maximize the value of lifetime income while keeping the participant and plan sponsor experience simple and easy to adopt.”
Along with Fidelity’s target date and asset management expertise, Cunningham added that participants can benefit from Fidelity’s integrated and holistic support including education, tools, and dedicated live, one-on-one support to help employees create a retirement plan that fits their goals.
Freedom Lifetime will utilize a blended investment approach, investing in a mix of active and index underlying funds, including the insurance pool, while employing active asset allocation across different asset classes. The series will offer competitive pricing, with asset-based pricing dependent on share class and vintage.
The portfolio management team for Freedom Lifetime will include long-tenured target date co-portfolio managers Andrew Dierdorf, Brett Sumsion, Finola McGuire Foley, and Cait Dourney Earle, who collectively have more than 85 years of experience at Fidelity.
“Fidelity’s deep research and capital markets expertise allow us to build the diversified Freedom Lifetime portfolios that are paired with the purposeful design of meeting predictable income needs,” Dierdorf said. “This offering provides access to guaranteed income to help keep employees on track toward their retirement goals.”
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified financial services and insurance organizations in the United States, featuring an A+ rating by Standard & Poor’s.
“Nationwide is pleased to extend our strong ongoing relationship with Fidelity by serving as an insurer on Fidelity Freedom Lifetime, which marks an important step forward in expanding access to retirement income solutions for America’s workers,” said Kevin Jestice, president of Retirement Solutions at Nationwide. “As a protection company with 100 years of experience safeguarding people and businesses, and more than a decade of experience with lifetime income solutions specifically designed for use within employer-sponsored retirement plans, we’ve seen how essential these offerings are as more employees approach retirement and look to turn savings into dependable income for a dignified retirement.”
New York Life, also a Fortune 100 company, is the largest mutual life insurance company in the United States and one of the largest life insurers in the world.
“For more than 180 years, New York Life has helped individuals turn savings into lasting financial security,” said David Cruz, head of Institutional Annuities at New York Life. “We’re proud to bring our deep expertise in guaranteed income solutions to Fidelity Freedom Lifetime, an important step in expanding access to retirement income for employees. With our long-term focus and experience delivering income for life, we are excited about this opportunity to help employees turn their savings into income that they can depend on throughout retirement.”
Employees will also have access to a digital experience that is fully integrated through Fidelity’s recordkeeping platform. This experience will provide users with the ability to model scenarios to illustrate potential income in retirement and, when eligible to purchase lifetime income, obtain real-time guaranteed income quotes, which allows them to take action to convert a portion of savings into lifetime income.
Fidelity offers a range of active, index and blend target date solutions totaling more than $770 billion in assets. To learn more about Freedom Lifetime, visit https://www.fidelityworkplace.com/s/freedom-lifetime.
SEE ALSO:
• Target Date Funds: A 401(k) Specialist Deep Dive
• Voya Launches Multi-Manager Alternative CITs for DC Plans
• MetLife Grows Retirement Income Offering with Liquidity Feature
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.