This article was originally posted by NAPA.
Transamerica is adding the State Street GTC Retirement Income Builder (the Series) to its recordkeeping platform, joining State Street Global Advisors (SSGA), Global Trust Company (GTC) and ARS (previously Annexus Retirement Solutions) in offering a target date fund (TDF) with an embedded income solution.
According to the firm’s Nov. 9 announcement, the Series combines SSGA’s asset management expertise and Transamerica’s stable value products with ARS’s patent-pending lifetime income solution, Lifetime Income Builder.
The solution—which launched earlier this year—is embedded directly within the TDF’s glidepath as a separate asset class, which helps promote growth opportunity and permits liquidity and portability. The Series is designed to be used as a qualified default investment alternative (QDIA).
“Transamerica is keenly focused on delivering solutions that can help participants better prepare for retirement,” stated Phil Eckman, president of Transamerica Workplace Solutions. “By adding this target date series as an option for plan sponsors and their participants, we deliver a much-needed investment option that is designed to generate both growth and lifetime income, not one over the other.”
Added Dave Paulsen, chief distribution officer at ARS, “Transamerica has always had a progressive approach to delivering new solutions and is a natural partner to offer this investment. Historically, lifetime income solutions require a tradeoff of growth opportunity or liquidity, but we’ve removed those tradeoffs within this product design.”
According to the announcement, one important component of the product design is the simplicity at the participant level. “We recognized that the industry was still asking participants to make decisions on solutions they didn’t understand,” Paulsen further observed. “By embedding lifetime income at the fiduciary investment management level, we eliminated those difficult decision points for the participant, while delivering the benefits they want.”
In addition, the Series helps mitigate sequence of return risk by capturing quarterly high-water marks on the full account value and utilizing the Transamerica Stable Value offering for those near and in retirement—helping protect participants’ savings and providing lifetime income. The fund targets a 6% annual income rate at income activation, calculated using the highest captured high-water mark of the fund.
Finally, in noting that the Series will be available across multiple recordkeeping platforms in the coming months, the announcement emphasizes that participants who choose to keep their assets in-plan will gain greater long-term value by benefiting from institutional pricing all the way through retirement.