To address retiree concerns about running out of money in retirement, MetLife announced that it is working with Fidelity Investments to offer a fixed immediate income annuity through Fidelity’s new retirement income solution.
The availability of the MetLife Guaranteed Income Program through Fidelity’s Guaranteed Income Direct solution is designed to help expand access to immediate income annuities by allowing plan sponsors to easily offer retirement income options within their defined contribution (DC) plans.
The solution will enable participants at all savings levels to purchase an immediate income annuity through an insurer selected by their employer and annuitize any portion of their savings. All funds not used to purchase the annuity remain in the plan, the announcement explains.
One of the challenges facing retirees as they approach the next phase of their lives is ensuring that their savings last through retirement. In fact, MetLife research found that a majority (71%) of U.S. employees are concerned about outliving their retirement savings, up from 60% just two years ago.
However, the passage of the SECURE Act in late 2019 removed the fiduciary barriers to offering lifetime income solutions through the workplace. As a result, the firm’s research indicates growing interest in these products among plan participants and an increasing number of plan sponsors taking actions to implement them.
“At MetLife, we believe simplicity should be the guiding principle when offering income annuities, and this solution makes it simple for plan sponsors to offer guaranteed income and simple for plan participants to annuitize their savings,” stated Melissa Moore, senior vice president and head of Annuities at MetLife. “Having a guaranteed stream of income can help retirees budget for their day-to-day expenses and protect against depleting their savings too quickly.”
To that end, MetLife’s research further shows that about one in three retirees (34%) who choose to receive their DC plan savings as a lump sum rather than annuitize depleted the lump sum in five years, on average. By being able to obtain a guaranteed stream of income through their employer, plan participants can take an important step in creating a financially secure future, the firm further suggests.
“We are committed to ensuring financial security for retirees and are pleased to be working with Fidelity Investments and middleware provider Micruity, who share our dedication to enabling positive retirement outcomes,” added Moore. “Through Guaranteed Income Direct, Fidelity has brought a powerful new solution to this market and this innovation makes vital protection products more accessible to employees.”
The Micruity Advanced Routing System (MARS™) facilitates “frictionless” data sharing between insurers, asset managers, recordkeepers, and connected stakeholders through a single point of service that lowers the administrative burden and enhances the user experience of retirement income products, enabling plan sponsors to turn retirement savings plans into retirement income plans at scale.
