401(k) Annuity Hub aimed at lifetime income in DC plans

Illustration showing 401(k)s in lifetime income space.

By Susan Rupe

Interest in lifetime income products within retirement plans is growing, and a new tool helps plan sponsors and advisors to match the right annuity product into the 401(k) plans for their employer clients.

The 401(k) Annuity Hub is a fully independent subscription service that helps retirement plan advisors and plan sponsors research a comprehensive database of lifetime income solutions. The Hub offers a process to identify suitable options and compare them.

“The Hub supports critical steps in the fiduciary process of surveying the landscape of available options and identifying those that fit high-level plan design needs,” said its founder, Tamiko Toland, who has 20 years of experience working in the annuity space.

“Retirement plan fiduciaries have been looking for a solution like this and a framework that allows them to use a simple and repeatable process to identify and compare appropriate products.”

The Hub offers subscribers a proprietary selection wizard to find solutions that fit their needs. In addition, subscribers may explore the site on their own using filters or searches. Each product includes a summary from the Hub as well as a printable PDF. Users can compare multiple products on the site and generate a printed side-by-side comparison to document the selection process.

On its public website, the Hub also offers free education on the topic of annuities in 401(k) plans.

A database of more than 30 products

The Hub has a database of more than 30 income products aimed at retirement plan advisors and sponsors. Toland told InsuranceNewsNet the inspiration for creating the Hub stemmed from her experience at TIAA, where she was head of lifetime income strategy and market intelligence.

“When I worked at TIAA, I would be talking to plan sponsors and advisors, and they would always ask me, ‘Can you just give me a list of whatever annuities are available?’ And there was no place for them to go to get a list.”

Toland eventually left TIAA to become cofounder and CEO of IncomePath, a subscription service available to financial professionals who can use it to help clients develop their retirement income plans.

“When I went independent, I realized there was a need for something that could help plan sponsors and advisors find the right lifetime income solutions for a particular 401(k),” she said.

“Most people who are trying to understand this space don't really understand annuities, and if they do, they don't understand how they work in the space. I really wanted to help them go from having little knowledge – or possibly no knowledge - to getting a feel for the landscape of products so they can then determine whether they make sense for their plan or how do they work with clients on this.”

Annuities in DC plans 'an exciting step forward'

In conjunction with the Hub’s launch, Toland wrote a white paper, “Lifetime Income in 401(k) Plans: A Top-Down Consideration Framework.” In the document, she describes the focus on retirement income within employer-sponsored plans as “an exciting step forward in the evolution of defined contribution plans.

“After years of halting progress, the time has come for these products to break into the 401(k) market in a meaningful way. Given improvements in product design, technology, and connectivity, retirement plan fiduciaries can envision the destination, but many are still looking for guidance on how to take the first steps to venture into this brave new world.”

Plan sponsors have a unique opportunity to strengthen the income security of employees using innovative new solutions that blend investments and annuities, the white paper states. Education is the crucial element to the expanded adoption of in-plan annuities and many plan fiduciaries will likely take smaller steps before they make big moves.

With more attention on the space, advisors and sponsors increasingly understand that these lifetime income solutions have benefited from retail annuity developments but have evolved to fit defined contribution plans. Product innovation will continue but there are options available now to effectively meet the needs of many plans.

The first step is to consider whether a plan should add lifetime income. If so, what options does the current recordkeeper offer? The ability to dig deeper into the plan preferences is predicated on understanding the product landscape and implementation options in the first place.

Told said advisors and sponsors can think of annuities as an anchor within the retirement income plan; the foundation that works with other distribution options to help people meet their goals in retirement.

Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].