BlackRock’s Retirement Income Solution a Major Step Forward for American Retirement Security
October 06 2021 - 9:30AM
Business Wire
Plan Sponsors Embrace Providing LifePath
Paycheck™ Solution to Their Participants
BlackRock today announced significant progress toward helping
more U.S. workers improve their financial security and access
guaranteed lifetime income through workplace retirement plans. Five
large plan sponsors whose plans together represent over $7.5
billion in target date investments, including Tennessee Valley
Authority Retirement System (TVARS), have elected to work with
BlackRock to implement its LifePath PaycheckTM solution as the
default investment option in their employees’ retirement plans,
subject to plan-specific timing and other implementation
considerations. With initial plan adoptions expected in 2022, this
action will provide the option and opportunity for over 120,000
U.S.-based 401(k) plan participants to obtain a guaranteed income
stream in retirement.
“As Americans are living longer and healthier lives, their risk
of outliving their savings is accelerating the ‘silent crisis’ of
financial insecurity in retirement. By addressing spending and
income in retirement, we’re working alongside our clients and
partners to help more people address these challenges.” said Mark
McCombe, Chief Client Officer, BlackRock.
For decades, the financial industry has focused on educating
workers to save more, as employer-managed defined benefit plans
have given way to participant-directed defined contribution plans.
Increasingly, U.S. workers with access to a 401(k) plan say they
are unsure about how to manage their savings in retirement - a
challenge that plan sponsors are eager to solve[i]. The LifePath
Paycheck solution takes an innovative approach to lifetime
retirement income by embedding annuity contracts issued by
Equitable[ii] and Brighthouse Financial[iii] directly into a target
date strategy[iv]. When a participant reaches age 59 ½, the
LifePath Paycheck solution offers the participant the option to
purchase fixed individual retirement annuities from the insurers,
that will provide a guaranteed stream of income for life.
Alongside plan sponsors, the investment consultant and plan
advisor community has long acknowledged the need for solutions that
assist participants through retirement. Following extensive due
diligence on the retirement income landscape and offerings, firms
such as Aon, Willis Towers Watson, Lockton, and Compass Financial
Partners, a Marsh & McLennan Agency LLC company, among others,
have been supportive of retirement income solutions.
“People are more reliant on their defined contribution savings
than ever before,” said Greg Fox, Head of U.S. DC Retirement Income
Solutions, Aon. “In response to this, many employers are looking
for ways to transform their plans to not only help employees save
and invest for retirement, but also help them thoughtfully and
effectively spend down their savings as they transition into
retirement.”
Many firms in the recordkeeping community, including Voya
Financial and Empower Retirement, among others, continue to support
the opportunities for individuals to be able to obtain a guaranteed
income stream in retirement. Jeff Cimini, SVP, Retirement Product
Management at Voya, added, “The demand for retirement income
solutions has been building for some time. Our research at Voya has
found 90% of individuals think having a guaranteed source of income
in retirement so they don’t outlive their savings is important or
extremely important.[v] At Voya, we’re pleased the industry remains
focused on providing innovative solutions that can help individuals
create a secure financial future, and we look forward to working
with BlackRock to progress LifePath Paycheck.”
Since pioneering the first target date fund in 1993, BlackRock
has a long history of innovating to help millions of people
world-wide improve retirement readiness, a need that is
increasingly acute in the current environment. Added Anne Ackerley,
Head of the Retirement Group, BlackRock, “As we look past the
pandemic, with all eyes on recovery, it’s time for the entire
retirement ecosystem to come together and address how we can build
a more financially secure American workforce for the future.”
The LifePath Paycheck™ (LPP) solution is subject to insurance
regulatory approvals, finalization of commercial agreements, and
plan sponsor adoption and implementation. The LPP solution will
initially only be available to U.S. employer-sponsored defined
contribution plans qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (“IRC”) and may thereafter be
available to other investor types, such as governmental plans
qualified under Section 457(b) of the IRC, that have each entered
into an investment management agreement with BlackRock, Inc. and/or
its affiliates.
i 2021 BlackRock DC Pulse Survey ii Equitable refers
specifically to Equitable Financial Life Insurance Company.
Guarantees provided within annuities are based on the claims-paying
ability of the issuing life insurance company. iii Brighthouse
Financial refers to Brighthouse Life Insurance Company, Charlotte,
NC and Brighthouse Life Insurance Company of NY, New York, NY. iv
Participation by Equitable Financial Life Insurance Company
(Equitable Financial) (NY, NY) and Brighthouse Financial in
delivering BlackRock’s investment solution is subject to certain
approvals, including regulatory approval of their respective
annuity products. v Voya Financial survey conducted June 3-4, 2021,
on the Ipsos eNation omnibus online platform among 1,005 adults,
aged 18+ in the U.S.
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version on businesswire.com: https://www.businesswire.com/news/home/20211006005183/en/
Media Contact: Thomasin Bentley 646-231-1769
thomasin.bentley@blackrock.com
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