As soon as December, Nationwide will introduce a new in-plan Fixed Indexed Annuity as part of a larger plan announced Wednesday to launch a full suite of retirement plan annuity products and partnerships in the wake of the SECURE Act.
The SECURE Act, passed at the end of 2019, makes it much easier for plan sponsors to include annuity products within defined contribution plans such as 401ks, which Nationwide says expands the ability for plan sponsors to help participants not only plan for retirement, but also live in retirement.
Given the pandemic’s impact on market volatility this year alone, Nationwide says consumers are much more interested than ever before in solutions that can provide a level of certainty and protection, citing data from the Nationwide Retirement Institute’s sixth annual Advisor Authority Study.
Retirees are living longer and facing greater pressure to fund their own retirement, as costs for healthcare and long-term care continue to rise. Employers are looking for accessible, portable and affordable solutions to help their employees protect their savings and ensure income in retirement.
To meet this need, Columbus, Ohio-based Nationwide announced it will begin to roll out at least five new in-plan annuity products and partnerships from late 2020 through 2021.
“We know this is not a one-size fits all problem, and we’re confident that a suite of solutions will give plan sponsors the flexibility to select the option that’s best for their participants,” said Eric Stevenson, President of Nationwide Retirement Plans. “Our approach is unique, by going beyond retirees’ well-established need for guaranteed income, to also address their growing need to protect principal. It’s the combination of both benefits that makes our approach a game-changer for our industry.”
Nationwide has a track record in the in-plan annuity market, serving as an insurance carrier in AllianceBernstein’s multi-insurer solution, Lifetime Income Strategy since 2012. Over the past eight years, Nationwide has accumulated $435 million in assets offering lifetime income to more than 25,000 plan participants.
“By offering a range of guaranteed solutions within the structure of a retirement plan, Nationwide can provide even more customers access to the benefits of guaranteed lifetime income and principal protection that are only available from an annuity,” said Eric Henderson, President of Nationwide Annuity.
About the suite
Nationwide’s new suite of products being rolled out over the next year is intended to offer a range of solutions for plan participants. That starts with December’s launch of the aforementioned in-plan Fixed Indexed Annuity, providing principal protection with potential for growth based on the return of an index.
In 2021, Nationwide will introduce several in-plan lifetime income options that pair income guarantees with Target Date Funds, all designed to be QDIA (qualified default investment alternative) compliant.
“Similar to a Target Date Fund, we will allow our plan participants to select an investment option and then we’ll take care of the rest of the puzzle by providing a glide path from accumulation into retirement income,” Stevenson said.
According to the recent Advisor Authority study, two-thirds of both Millennial investors (65%) and Gen X investors (66%) indicate they are likely to incorporate in-plan guarantees within their defined contribution plans. The study also showed that nearly two-thirds of advisors and financial professionals (64%) say they are likely to adopt in-plan guarantees to provide guaranteed income within clients’ defined contribution plans.
Six in 10 (60%) employers also say they would consider offering employees lifetime income solutions according to a 2019 survey by Willis Tower Watson.
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.
