TIAA is offering a deferred fixed annuity to the corporate retirement market that provides a predictable, steady stream of guaranteed income for life in retirement, according to a news release.
The TIAA Secure Income Account is specifically designed to be used as an allocation within managed accounts or custom target-date model portfolios in 401(k) plans, the company said.
This is the first time TIAA has opened its offerings to the corporate retirement market. The company noted that it has consistently paid out more than $500 billion in retirement benefits to millions of people working in higher education and other non-profit, purpose-driven fields over its 100-year history. “Now, private-sector companies can provide employees with TIAA's unique, pension-like guaranteed income for life as part of their retirement plan,” it said in the release.
TIAA said plan participants' contributions to the TIAA Secure Income Account are guaranteed to grow over time and are protected from losing value no matter what the market does. It also provides the flexibility and personalization of a 401(k).
“It is fully cashable during employees' working years, and they can take the account with them if they leave their employers or the workforce. Employees can choose—but are not required—to turn some or all of their savings into monthly income paychecks for life when they stop working,” the company noted.
As part of a plan's Qualified Default Investment Alternative (QDIA), TIAA said, “it can turn participant inertia into an advantage, enabling plan sponsors to automatically direct plan participants to a product with principal protection, guaranteed growth, low volatility and lifetime income with potentially increasing payments,” it said, adding that employees who choose to annuitize will not pay any expenses or commissions.
The Secure Income Account is available through the defined-contribution investment-only distribution channel overseen by Nuveen, TIAA's asset manager, the company said. It added that it is the first in a series of lifetime income solutions planned for a variety of retirement savings vehicles, including employer-sponsored and individual IRAs.
“People are living longer and need help preparing for a secure retirement, yet few corporate defined contribution plans offer the guaranteed lifetime income they need,” Thasunda Brown Duckett, president and CEO of TIAA, said in a statement. “Building on our heritage, we are offering companies of all types and their employees a solution to more efficiently save, invest and ensure those assets last through retirement.”