PLANADVISER - Spring 2023 - 31

The AllianceBernstein Lifetime Income Strategy product
is an example of a target-date fund with an optional
embedded GLWB backed by multiple insurers. Participants
may choose a secure income level ranging from 0% to 100%.
That percentage determines how much of their account
balance will be gradually allocated to their plan's secure
income portfolio, beginning around age 50; participants
may change their allocation.
In 2022, Nationwide initiated a new GLWB category with
its NCIT American Funds Lifetime Income Builder Target
Date Series, according to Cathy Marasco, associate vice
president of product development for Nationwide Retirement
Solutions in Columbus, Ohio. The series uses a group
fixed-indexed annuity that is embedded in certain targetdate
funds in the series, like any other investment holding
of the TDF, she explains. This allows
the investment fiduciary to allocate to
the annuity on the participant's behalf.
Once the fund reaches the target
date, the investment automatically
generates 6% of the income base as
total income annually, though participants
may defer distributions to a later
date or reallocate to another in-plan
investment option. If the equity portion
of the underlying TDF goes to zero, the
annual income benefit will adjust from
6% to 4.5% of the income base and is
guaranteed by Nationwide for the rest
of the participant's life.
Other Products
FlexPATH Strategies offers its Target
Income Portfolios through plans that
use TIAA as recordkeeper. The portfolios
are available in three profiles:
conservative, moderate and aggressive,
with portfolio equity levels at retirement
increasing in that order. FlexPATH
replaces allocations that would have gone to bond funds with
investments in the liquid version of the TIAA Traditional
fixed annuity. The participant has the option to convert her
TIAA Traditional balance to a lifetime income stream.
The TIAA Traditional annuity has several features that
benefit participants, says Brian Roberts, senior vice president
with flexPATH. Long-term investors can accumulate
excess reserve credits that can increase annuity payout
rates by as much as 20%, for instance. " TIAA Traditional's
long-term returns have been comparable to an aggregate
bond index, " Roberts says. " It underperforms during periods
of falling interest rates and outperforms during periods of
rising interest rates. It also provides an added level of security
as participants approach retirement because it doesn't
decline in value when interest rates go up. " -Ed McCarthy
A September 2022 report, " The Retirement Plan Lifetime
Income Strategies Assessment, " from the Morningstar
Center for Retirement & Policy Studies, summarized the
major approaches to retirement income options:
* Portfolio-only - Participants
use Social Security benefits and
systematic withdrawals from their
retirement plan balances to fund
expenses in retirement.
* Fixed single premium immediate
annuity at retirement - Participants
purchase a fixed single
premium immediate annuity with
a portion of wealth at retirement.
* Variable SPIA at retirement -
These are the same as the fixed
SPIA except for being variable
instead. Variable SPIA payments
fluctuate with the capital markets.
* Dollar-cost average into deferred
income annuities - For a period
before retirement, participants
purchase a series of DIAs whose
income will start at retirement.
* Qualified longevity annuity
contract at retirement - Purchase
of a QLAC entitles the owner to
payments starting at age 80.
* Variable deferred annuity with
guaranteed living withdrawal
rider - Contributions are made to a
variable deferred annuity ending at
retirement, at which point guaranteed
living withdrawals begin.
Participants | Spring 2023 | planadviser.com 31
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PLANADVISER - Spring 2023

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