UBS and Genworth Team Up to Offer Guaranteed Income for Life Option for Employer-Sponsored Plans |
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Written by U.S. Insurance News
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Thursday, 31 January 2008 |
Americans have embraced a cold, hard fact about their retirement: Social Security checks aren’t going to cut it.
Americans have embraced a cold, hard fact about their retirement: Social Security checks aren’t going to cut it.
The Harris Interactive “America Speaks Out on Retirement: 2007 Investor Research Study” revealed that 93 percent of those polled said that it’s important to them to have a source of guaranteed income besides Social Security.
To allay fears that pension funds and Social Security may run dry, or at the least be insufficient, UBS Global Asset Management and Genworth Financial Inc. have co-introduced a guaranteed income for life option for 401(k) plan participants that will be available with UBS’s new target retirement funds and other investment options. The guaranteed income for life benefit is expected to be available by the end of the first quarter.
Drew Carrington, who heads the Defined Contribution and Retirement Solutions Group at UBS Global Asset Management, said this guaranteed income for life benefit is the “final piece of the puzzle” for his company’s offerings to retirement plan sponsors.
“Our target retirement funds already address three major risks—market, shortfall and inflation—faced by investors as they prepare for retirement,” Carrington said, adding, “We are now able to help plan sponsors provide employees assurance that they will not outlive the income they receive through retirement.”
Subject to regulatory approval, this portable, low-cost benefit will allow 401(k) participants to withdraw five percent of their highest annual locked-in portfolio value for life, even if total withdrawals ultimately exceed the value of their portfolios. In addition, the guaranteed income a participant receives can increase if the total value of their portfolio also increases during bull markets. Market declines will not affect the level of guarantee.
Participants in 401(k) plans can begin enrolling in this guaranteed benefit at age 50. Automatic withdrawals of 5 percent of the highest locked-in account value can begin at age 65. In the event a participant dies, any remaining assets pass on to their beneficiaries. The lifetime income guarantee will be portable and preserved via an IRA rollover.
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