Search
 

Monthly Check-in

Annuities have rarely been the investment option of choice for most, but a couple of new products could let 401(k) participants reap some of the benefits of an investment that guarantees payouts for life

By Beth Karlin | Updated on March 01, 2008

With the gradual disappearance of the guaranteed-for-life payouts from defined benefit pensions, plan sponsors have been searching for investments that would help their participants make sure their 401(k) savings don’t expire before they do. Until recently, the hunt yielded few solutions aside from variations of traditional annuities. But don’t give up hope. A new breed of guaranteed minimum withdrawal benefit (GMWB) plans is emerging that ties the guaranteed lifetime withdrawal benefits of an annuity to the popular target fund approach and produces an investment option for older workers.

The latest GMWB, set to launch in the second quarter, is a product jointly developed by UBS Global Asset Management and insurer Genworth Financial Inc. The yet-to-be-named option promises an employee a life-long disbursement of a minimum 5% of his portfolio, even if the total distribution exceeds the portfolio’s value. But unlike the fixed annuity approach, the payout would increase as the portfolio increases in value. “It offers the advantages of annuities, but with the flexibility, simplicity and institutional pricing of a collective fund,” says Cindy Vogl, senior product manager for UBS global asset management. “Participants retain control over the assets, which can continue to grow after retirement.”

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2024 ALM Global, LLC. All Rights Reserved.