CitiStreet is offering immediate annuities from eight leading companies to retiring participants in its defined contribution retirement plans.
The offerings are not options within the defined contribution platform, however. In order to participate, investors must retain a balance in their DC plan. "This is a great way for the plan sponsor to help retain retiree assets in the plan," noted Ray Martin, president and CEO of CitiStreet Advisors. And for the investor, "the Income Solutions product allows a participant to pensionize part of his or her retirement savings, effectively converting a portion of their savings into a regular, insured income to pay essential expenses" while still growing their 401(k) assets.
The eight companies that will compete for a participant's business are: AIG, The Hartford, John Hancock, Mutual of Omaha, Principal Life, Protective Life and Prudential. All of their offerings will be low-cost, institutionally priced.
"The aging and retiring demographic is rapidly changing the constituency balance in retirement benefit plans," Martin noted. "There now has to be a focus, as much on withdrawal as on accumulation, which will be driven by this important and rapidly growing constituency."