Financial services heavy-hitter TIAA is expanding its guaranteed lifetime income product to the corporate retirement market for the first time.
Coming on the heels of its 2021 research which identified a surging demand from participants, TIAA is hoping its Secure Income Account (SIA) product will fill a void in the corporate retirement arena. Released in October, TIAA’s report found that more than 70% of workers say they would choose to work for, or stay with, a company that offers access to guaranteed lifetime income in retirement compared to one that doesn’t.
Joining numerous companies who have introduced similar products, TIAA says its experience with 403b annuities will fuel its foray into the market by offering a deferred fixed solution that offers a predictable, steady stream of guaranteed income for life in retirement. It notes that plan participants’ contributions are guaranteed to grow over time and are protected from losing value no matter what the market does. It will be available through the defined-contribution investment-only distribution channel overseen by Nuveen, TIAA’s asset manager.
The TIAA Secure Income Account is specifically designed to be used as an allocation within managed accounts or custom target-date model portfolios in 401k plans. As part of a plan’s Qualified Default Investment Alternative, TIAA says that plan sponsors can seamlessly direct plan participants to a product with “principal protection, guaranteed growth, low volatility and lifetime income with potentially increasing payments.” Employees who choose to annuitize will not pay any expenses or commissions.
Additionally, the SIA is fully cashable during employees’ working years, and they can take the account with them if they leave their employers or the workforce. Employees can choose – but are not required – to turn some or all of their savings into monthly income paychecks for life when they stop working. They also have the opportunity for more growth and higher amounts of income the earlier and longer they contribute because of the unique way TIAA shares profits with its individual clients. Lifetime income payments may also increase once people are in retirement, which can help offset the effects of inflation.
“People are living longer and need help preparing for a secure retirement, yet few corporate defined contribution plans offer the guaranteed lifetime income they need,” said Thasunda Brown Duckett, TIAA’s President and Chief Executive Officer. She adds that TIAA hopes its new offering will be valuable to companies to help employees “efficiently save, invest and ensure those assets last through retirement.”
TIAA is the top provider in the not-for-profit retirement market and has $1.3 trillion in assets under management.