TIAA’s default investment solution that provides access to a guaranteed-interest annuity contract has recently grown to more than $30 billion in assets and over 400,000 individual participant accounts across nearly 500 institutional clients, according to a Feb. 20 announcement by the firm.
This comes just 24 months after RetirePlus surpassed $10 billion in assets and only five months after growing to 250,000 participant accounts. The firm suggests that this accelerating growth stems from the increasing demand for a default retirement solution that provides access to guaranteed lifetime income for all participants.
“TIAA fundamentally believes that all retirement plans in the U.S. should offer participants the option to have a monthly retirement paycheck as long as they live,” stated Colbert Narcisse, chief product and business development officer at TIAA. “RetirePlus is one of the vehicles to provide this retirement paycheck by offering guaranteed income in retirement and guaranteed growth during accumulation—all at a potentially lower plan cost.”
In fact, according to the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington University School of Business, a surprising number of Americans display a lack of understanding regarding how long people tend to live in retirement, and this lack of longevity literacy hinders retirement planning and saving, TIAA further suggests.
Under TIAA’s RetirePlus solution, plan sponsors can create built-in guarantees during asset accumulation and distribution, reduce default option costs, tailor default options based on its participant's demographics, and allow participants to create guaranteed lifetime income in retirement. What’s more, the solution can be a qualified default investment alternative (QDIA).
RetirePlus also allows plan sponsors to work with a 3(21) fiduciary advisor or a 3(38)-investment manager who can customize all aspects of model attributes for the unique needs of their participants.
As to guaranteed lifetime income, the solution allows participants to convert some or all of their savings into a “personal pension” in retirement when TIAA Traditional is built into the plan, the announcement further explains. TIAA Traditional offers an opportunity to provide even more income for long-term contributors through a loyalty bonus that rewards savers with additional income if they choose to annuitize based on how long they have been investing. TIAA notes that it has shared more than $3 billion a year on average in profits over the past 10 years.
In addition to RetirePlus for the 403(b) and nonprofit market, TIAA offers the TIAA Secure Income Account (SIA), which is a fixed annuity like the TIAA Traditional annuity and is specifically designed to be used as an allocation within managed accounts or target-date portfolio strategies in non-403(b) plans.
The TIAA SIA is also embedded within the Nuveen Lifecycle Income CIT Series, a collective investment trust (CIT) target-date solution that offers participants the option of converting a portfolio of their holdings into guaranteed income at retirement. The trustee of the CIT is SEI Trust Company.
