Three heavyweights in the in-plan income space have teamed together to announce a new lifetime income target-date series.
The NCIT American Funds Lifetime Income Builder Target Date Series from Nationwide, Capital Group, and Annexus Retirement Solutions incorporates Lifetime Income Builder, a fixed indexed annuity with a guaranteed lifetime withdrawal benefit invented by Annexus.
The companies said it adds Nationwide’s suite of in-plan guarantees and will be available in the TDF Series as an investment option in defined contribution plans. It’s designed “to help participants optimize growth potential, and when the time comes, generate guaranteed income that will last a lifetime.”
“The industry itself has not truly tried to solve the problem of including lifetime guarantees in retirement plans,” Dave Paulsen, chief distribution officer for Annexus Retirement Solutions, said. “Things typically start institutionally and move down to the retail level. With lifetime income in DC plans, the industry took successful products in the retail space sold to individuals and applied them to a group asset management platform. So, it went in in reverse—from retail to institutional—and didn’t work.”
The “A” word (annuity), extra fees, and a general lack of how the products work led to decision paralysis, Paulsen noted. Routine decisions, therefore, should be taken out of the individual’s hands, something target-date funds have successfully done through professional asset management and glidepaths that feel customized.
“Getting people into target-date funds that mitigate risk over time is really good and gets you to age 65. But that’s why we need the ‘through’ portion.”
Charles Millard
“They’ve fallen short in that they get you to, but not through, retirement,” he explained. “The only true ‘through’ retirement is a guarantee. Opportunites included in the SECURE Act now make this more possible.”
It’s what they’ve added to the TDF Series, which is financially engineered to deliver a total income of 6% at the projected retirement start date. It leverages several of American Funds’ proprietary funds, investment management, and 90-year history. The underlying mutual funds are actively managed for growth and/or income opportunity.
“Getting people into target-date funds that mitigate risk over time is really good and gets you to age 65,” Charles Millard, Senior Advisor with Annexus Retirement Solutions, added. “But that’s why we need the through portion. Also, decision paralysis about choosing a guaranteed product applies not only to participants, but plan sponsors and advisors because their heads are spinning about advising clients. If you can check the necessary boxes and not have to give up liquidity, growth, efficiency, and portability, and can make it simple for them, then you’ve cracked the code, which is what we’ve done.”
The TDF Series is structured as a Collective Investment Trust and includes Lifetime Income Builder, a group fixed indexed annuity (FIA) with a guaranteed lifetime withdrawal benefit (GLWB). For plan sponsors, it provides a QDIA-compliant structure and a combination of liquidity, portability, and ease of use that the companies say has been largely missing from previous in-plan income solutions.
“Our product development philosophy is centered on the participant, and this latest offering rounds out our suite of in-plan guarantee solutions, which are all designed to help generate lifetime income,” Eric Stevenson, president of Nationwide Retirement Solutions, concluded. “Our partnership with industry leaders Capital Group and Annexus Retirement Solutions reinforces our commitment to helping build secure financial futures by providing participants an income solution that supports them not only up to – but all the way through – retirement.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
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I worked during high school and contributed to Social Security since the age of 15. I started teaching after working over 20 years in the corporate world. I taught for 30 years and will loose $498 of Social Security benefits due to the WEP. Eliminating the WEP would be fair to us retirees that contributed over half of our working lives into Social Security. I hope the law to eliminate the WEP is abolished .
I WAS SUBJECT TWO (BOTH) OFF SET AND W/E . I AM SINGLE NEVER MARRIED BUT MY RETIREMENT SUCKS BOTH SS AND CIVIL SERVICE PENSIONS WERE CUT.
Issues concerning disability needs to be evaluated closer and more often. I know of several never worked and trying and already receiving disability. Bipolar come on give me a break. She receives disBilty and runs the roads to Florida to the pain clinics. Cruises several times a year, this is the sort of issues why social security is going belly up. Ones who only put into social security short time of their life rest working under the table and it for themselves now receiving social security. Just a few hundred less than my self. Which I’ve worked since sixteen yrs old. Now 67. Only fives years had I missed paying into.
This is the reasons for revaluation of social security.much more I want to put forth all for now .
I worked for the city’s professional fire department for 30 years which had its own retirement system. I paid into SS for 37 years, 10 before I joined, 16 during doing parttime work and 17 years after I retired. I never hit the substantial income threshold but every January I recvd a SS letter stating what I would have in SS monthly payments. When I applied for SS I was told my benefit was reduced $600 per month because of the WEP. I have something but not what my monthly SS letter for 40 years stated I was eligible for. Thanks Reagan and the Republicans that enabled this law.
I work till I was 42 I was hurt by a careless person. I had gotten knocked off a ladder building a house. I got 2 repture disc. A torn rotator cuff and a torn bicep. Was opperar operated on at the age of 42. Besides what happened on the the Dr injured me for during the surgery. for life. I had to survive on ssi which was 540.00 till went on SS now I get 747.00 now. I can’t get a house or yet alone Even to enjoy my retirement.. I lost everything my house my business my family. I paid dearly for some careless person and Dr. Ruined my life. It’s not right for anyone that was disabled because of someone else. I suffer all my life since I was 42 it’s not fair that I had to suffer from people that injured me. I’m sure there are more people just like me. We should get what the average person on SS gets. Why should I have to suffer because someone permanently injured me. That wasn’t my fault. Please give people like me a chance to enjoy at least our retirement. Make it fair for all. I like to see what I had to do just survive for 20 long years. I’m tired trying to do small Jobs just to survive. III am 66 and have no choice but to do something to just pay my bills. I am about to loose everything I have in storage lockers because I can’t get caught up. No one help me. I am 66 and so tired of suffering because other people hurt me it’s not fair. I never even been out ot the State I lived in, never ever been on a plane. I need a break from this torture that I been living.
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