Principal launches new variable annuity buffer fund options
Principal Financial Group® today announced the launch of new buffer fund investment options within its variable annuity business aimed at helping customers balance the need to build and protect savings in retirement with managing risk. The new investment options provide both market growth and limited downside protection – two key factors shifting variable annuities in light of rising inflation and market volatility.
On July 1, Principal® introduced the first of four, one-year, defined outcome investment accounts – the Principal Variable Contracts (PVC) U.S. LargeCap Buffer Series. Available exclusively through Principal variable annuities, these accounts help protect individuals from some market loss (up to the first 10% of index losses per defined outcome period) and help them plan for a more consistent and stable investment experience.
“We’ve seen continued demand from individuals nearing retirement and current retirees who are looking for investment options that offer growth potential while reducing risk. And our research shows 66% of investors place equal value on protecting savings and maximizing gains1,” said Sri Reddy, senior vice president, Retirement & Income Solutions at Principal. “Our new buffer accounts are a solution that provide savers the ability to accumulate on the upside while buffering against market downturns at a competitive cost. They were designed for moments like now when inflationary pressures, rising interest rates, and fears of a recession are causing market uncertainty.”
The new buffer series from Principal, which will track the S&P 500 Price Return Index, is designed to provide 10% downside protection and full participation in the first 10% of market gains. Gains above 10% will be determined by the participation rate set at the beginning of the outcome period. If markets perform strongly, investors can continue to experience upside growth with no hard cap on their earnings. And the underlying fund’s physical stock ownership provides dividends, which could improve the overall strength of the account.
The buffer accounts also offer investment flexibility, providing clients with the ability to move money in and out of their accounts at any time.2
“We don’t know how long this market cycle is going to last, so we’re striving to enable better outcomes for investors in a time of uncertainty,” Reddy said. “Our buffer accounts have a shorter, one-year defined outcome period and will reset annually to adjust to future market conditions to help safeguard investments while still enabling growth accumulation.”
Developed and managed by the firm’s global equities investment team, the buffer series can work in combination with both equity and fixed income holdings to reinforce investment goals and tolerance for risk. They are available with Principal® Pivot Series and Principal® Lifetime Income Solutions II variable annuities, as well as most previously issued Principal variable annuities.
Principal has plans to launch three additional accounts in October 2022, January 2023, and April 2023. All four accounts will have a one-year defined outcome period and the participation rates will be set based on market conditions at the beginning of the quarter.
Principal Financial Group® (Nasdaq: PFG) is a global financial company with 18,500 employees3 passionate about improving the wealth and well-being of people and businesses. In business for more than 140 years, we’re helping more than 54 million customers4 plan, protect, invest, and retire, while working to support the communities where we do business, and build a diverse, inclusive workforce. Principal® is proud to be recognized as one of America’s 100 Most Sustainable Companies5, a member of the Bloomberg Gender Equality Index, and a Top 10 “Best Places to Work in Money Management6.” Learn more about Principal and our commitment to building a better future at principal.com.
Annuities are issued by Principal Life Insurance Company®. Securities offered through Principal Securities, Inc., member SIPC and/or independent broker/dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392.
S&P 500 is a trademark of S&P Global and is used under license. The Principal Variable Contracts (PVC) U.S. LargeCap Buffer Series is not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of investing in the product.
The buffer funds have characteristics unlike many other traditional investment products and may not be suitable for all investors.
1 Principal Retirement Security Survey – Investments, July 2022
2 Investing after the start date or moving money out before the end date will affect the expected outcome