The SECURE Act opened a new era of opportunity for retirement plan participants – expanding the ability for plan sponsors to help participants not only plan for retirement, but also live in retirement.
One way the Act will help is by making in-plan annuities within defined contribution plans such as 401(k)s and 457(b)s more accessible and portable than before.
This comes at an opportune time as American savers weather a perfect retirement storm. Given the pandemic's impact on market volatility this year alone, consumers are much more interested than ever before1 in solutions that can provide a level of certainty and protection. Retirees are living longer and facing greater pressure to fund their own retirement, as costs for healthcare and long-term care continue to rise. Employers (plan sponsors) are looking for accessible, portable and affordable solutions to help their employees protect their savings and ensure income in retirement.
To meet this need, Nationwide announced today that it will begin to roll out a suite of new in- plan annuity products and partnerships with industry leaders, including at least five new solutions from late 2020 through 2021.
"We know this is not a one-size fits all problem, and we're confident that a suite of solutions will give plan sponsors the flexibility to select the option that's best for their participants," said Eric Stevenson, President of Nationwide Retirement Plans. "Our approach is unique, by going beyond retirees' well-established need for guaranteed income, to also address their growing need to protect principal. It's the combination of both benefits that makes our approach a game-changer for our industry."
Uniquely Positioned to Meet this Need
As an established industry leader serving government and corporate retirement plans, as well as a top provider of annuities, Nationwide is uniquely equipped to address this challenge, with the in-house expertise to develop new solutions and deep partnerships across the industry to bring them to market.
Nationwide has a track record as an innovator in the in-plan annuity market, serving as an insurance carrier in AllianceBernstein's multi-insurer solution, Lifetime Income Strategy since 2012. Over the past eight years, Nationwide has accumulated $435 million in assets offering lifetime income to more than 25,000 plan participants.
"By offering a range of guaranteed solutions within the structure of a retirement plan, Nationwide can provide even more customers access to the benefits of guaranteed lifetime income and principal protection that are only available from an annuity," said Eric Henderson, President of Nationwide Annuity.
About the Suite
Nationwide's new suite of products will offer a broad range of solutions to meet the needs of plan participants. In December, Nationwide will introduce a new in-plan Fixed Indexed Annuity to provide principal protection with potential for growth based on the return of an index.
Additionally, in 2021, Nationwide will introduce several in-plan lifetime income options that pair income guarantees with Target Date Funds, all designed to be QDIA (qualified default investment alternative) compliant.
"Similar to a Target Date Fund, we will allow our plan participants to select an investment option and then we'll take care of the rest of the puzzle by providing a glide path from accumulation into retirement income," Eric Stevenson said.
According to Nationwide's recent Advisor Authority study2, two-thirds of both Millennial investors (65%) and Gen X investors (66%) indicate they are likely to incorporate in-plan guarantees within their defined contribution plans. The study also showed that nearly two-thirds of advisors and financial professionals (64%) say they are likely to adopt in-plan guarantees to provide guaranteed income within clients' defined contribution plans. Six in ten (60%) employers also say they would consider offering employees lifetime income solutions according to a 2019 survey by Willis Tower Watson.
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the United States. Nationwide is rated A+ by both A.M. Best and Standard & Poor's. An industry leader in driving customer-focused innovation, Nationwide provides a full range of insurance and financial services products including auto, business, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; excess & surplus, specialty and surety; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com. Follow us on Facebook and Twitter.
1The sixth annual Advisory Authority Survey was conducted online within the United States by The Harris Poll on behalf of Nationwide from May 27 – June 25, 2020 among 1,768 financial advisors and 817 investors, ages 18+.
2The sixth annual Advisory Authority Survey was conducted online within the United States by The Harris Poll on behalf of Nationwide from May 27 – June 25, 2020 among 1,768 financial advisors and 817 investors, ages 18+.
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