Summary of Article Published by Ignites: Principal to Launch Target-Dates with Built-In Guarantee*
Original article published October 28, 2024 by Beagan Wilcox Volz.
Principal, a major player in the retirement industry, is set to launch a new target-date series with built-in guaranteed income in 2025. The new product will incorporate ARS’s “Lifetime Income Builder,” a group fixed indexed annuity with a guaranteed lifetime withdrawal benefit built into the target-date fund glide path.
For participants with this investment, Principal will begin allocating a percentage of participants assets into Lifetime Income Builder as they near age 47. That percentage will increase annually until age 65, when participants can begin drawing 6% annual retirement income.**
This move by Principal reflects a growing trend in the retirement industry towards offering guaranteed income solutions within target-date funds. The company plans to introduce a passive vintage of the target-date collective investment trusts (CITs) within a year and will encourage plan sponsors to use the product as a qualified default investment alternative.
While Principal has offered in-plan annuities for about a decade, partnering with ARS for this new product allows for better speed to market, though the company will continue to explore using its own insurance capabilities for future income solutions.
Read the full article here.
*Subject to the claims-paying ability of the insurance company.
** Annual income percentages for the funds are targeted to be 6% but actual percentages may vary.
