Financial firms set to launch target date fund designed to deliver better participant outcomes and greater lifetime income with a multi-carrier model featuring major insurance providers
SCOTTSDALE, AZ March 31, 2022 – Retirement income solution innovator Annexus Retirement Solutions announced today that it has joined forces with State Street Global Advisors, the world’s 4th largest asset manager¹, to help develop a target date fund (TDF) with an embedded income solution for the defined contribution (DC) plan marketplace. This will become the second TDF income solution on the market that leverages the Annexus Retirement Solutions patent-pending Lifetime Income Builder design, which has successfully redefined how the industry can deliver in-plan lifetime income solutions in a TDF.
“We’re excited about this opportunity to work with Annexus Retirement Solutions (ARS) to introduce an
in-plan income solution that’s long overdue and complements our current DC plan offerings,” said Bob McGowan, managing director and head of the Financial Institutions Group at State Street Global Advisors (SSGA). “We pride ourselves on always focusing on the needs of plan participants and sponsors and this solution once more demonstrates our commitment to enhancing retirement outcomes. By combining our asset management expertise with ARS’ product innovation, our solution creates synergies to deliver a complementary in-plan income solution that benefits all parties in the DC value chain – most critically the participant.”
The investment solution embeds Lifetime Income Builder – a product that employs group fixed indexed annuities (FIAs) with a guaranteed lifetime withdrawal benefit (GLWB) – within the familiar and automatic structure of a TDF. Innovation in product design enables daily valuations of Lifetime Income Builder, a familiar trait for retirement plan products and seeks to provide participants with additional growth opportunity and six percent income in retirement.²
By integrating Lifetime Income Builder into a TDF, the solution gives DC plan sponsors an efficient investment option which a plan sponsor could consider to be Qualified Default Investment Alternative (QDIA)-compliant. For participants, it offers a combination of liquidity, portability and ease of use leading up to and throughout retirement.
“Until Lifetime Income Builder, industry attempts to deliver in-plan lifetime income largely relied on existing individual-based products that weren’t optimized to meet participants’ needs in the DC plan space,” said Dave Paulsen, chief distribution officer for Annexus Retirement Solutions. “That compromised approach created unnecessary complexities and required participants to sacrifice returns and a measure of flexibility and control to receive guaranteed income. Our patent-pending product innovation eliminates those barriers and is designed for better overall participant outcomes. We’re excited about the opportunity to work with State Street Global Advisors to bring the second target date series with Lifetime Income Builder to market. Their proven approach to investment management – and the value it brings to participants – is a strong complement to our expanding solution lineup.”
The TDF design anticipates using three of the nation’s top-tier insurance providers to deliver lifetime income. This multi-carrier model allows the insurance providers to bid on pricing each month, which can help lower participant costs and deliver higher income benefits and better outcomes.
Annexus Retirement Solutions is providing its Lifetime Income Builder product and the Annexus Retirement Data Exchange (ARDX), a proprietary middleware solution that streamlines data communication and administration. ARDX also enables faster, seamless fund implementation and processing capabilities for the recordkeeper and all other parties. State Street will manage the solution’s underlying assets and provide the index for the group fixed indexed annuity. The TDF will be available across multiple recordkeeping platforms.
Designed to help participants regardless of age, financial experience or level of retirement savings, the solution is easily adapted to plans of any size, across most DC markets. The new DC plan product offering is scheduled to launch in the first half of 2022.
About Annexus Retirement Solutions
Annexus Retirement Solutions designs products that help working Americans secure their financial futures leading up to, and all the way through, retirement. These solutions are financially engineered to provide defined contribution plan participants a seamless approach to optimize savings, help maximize a source of lifetime income, and protect against the biggest challenge in retirement – outliving their income. Annexus Retirement Solutions was created by Annexus, the leading independent developer of insured wealth management solutions. In 2019, Blackstone made a strategic investment in Annexus, acquiring a minority stake in the company.
About State Street Global Advisors
For four decades, State Street Global Advisors has served the world’s governments, institutions, and financial advisors. With a rigorous, risk-aware approach built on research, analysis, and market-tested experience, we build from a breadth of active and index strategies to create cost-effective solutions. As stewards, we help portfolio companies see that what is fair for people and sustainable for the planet can deliver long-term performance. And, as pioneers in index, ETF, and ESG investing, we are always inventing new ways to invest. As a result, we have become the world’s fourth-largest asset manager¹ with US $4.14 trillion³ under our care.
¹ Pensions & Investments Research Center, as of 12/31/20.
² The actual lifetime payment percentage may be less than 6% annually and will be based on the actual guaranteed minimum lifetime payment percentage, the investment performance of the TDF’s equities and fixed-income securities, and where investment performance is insufficient to meet the 6% target, return of investment principal. During the income payment phase, if the total TDF account value of equities and fixed-income holdings reaches zero, the actual lifetime payment percentage is reduced to the actual guaranteed minimum lifetime payment percentage, which is targeted to be 4.5% annually. The actual guaranteed minimum lifetime payment percentage is calculated as the sum of each individual insurance provider’s FIA contract guarantee and the corresponding GLWB at income payment activation and may be less than the target guaranteed minimum lifetime payment percentage of 4.5% annually.
Insurance contract guarantees are subject to the claims-paying abilities of the insurer. If an insurer is unable to meet the contractual guarantee or other payment terms of its FIA contract, the Target Date Fund that invests in the FIA contract may lose principal or future interest payments due under the terms of the FIA contract.
³ This figure is presented as of December 31, 2021, and includes approximately $61.43 billion of assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated. The actual guaranteed lifetime payment percentage is the sum of each individual insurer’s Fixed Indexed Annuity (FIA) contract guarantee and the corresponding GLWB (guaranteed lifetime withdrawal benefit).
Important Risk Information:
Payment of the lifetime income benefit is subject to the claims-paying ability of the issuing insurance company; it is possible that the issuing company may not be able to honor the income payouts at any time. Neither the Lifetime Income Builder nor the Guaranteed Lifetime Withdrawal Benefit are insured by the FDIC or by another governmental agency; they are not obligations of the FDIC or deposits, or obligations guaranteed by State Street Global Advisors. The Lifetime Income Builder feature is not provided by or guaranteed by State Street Global Advisors or any affiliate of State Street Global Advisors.
Investing involves risk including the risk of loss of principal.
The whole or any part of this work may not be reproduced, copied, or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent.
All information is from SSGA unless otherwise noted and has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information, and it should not be relied on as such.
The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor.
SSGA Target Date Funds are designed for investors expecting to retire around the year indicated in each fund’s name. When choosing a fund, investors should consider whether they anticipate retiring significantly earlier or later than age 65 even if such investors retire on or near a fund’s approximate target date. There may be other considerations relevant to fund selection and investors should select the fund that best meets their individual circumstances and investment goals. The funds’ asset allocation strategy becomes increasingly conservative as it approaches the target date and beyond. The investment risks of each fund change over time as its asset allocation changes.
Annexus Retirement Solutions is not affiliated with State Street Global Advisors Funds Distributors, LLC.
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4641192.1.1.AM.RTL Exp. Date: March 31,2023