HARTFORD, Conn. — Hartford Life Insurance Co. is offering an annuity investment option for 401(k) plans, the third defined contribution provider to do so.
The Hartford Lifetime Income program allows plan participants to accumulate guaranteed future income within their 401(k) plan, said Joseph Eck, vice president of institutional sales. The investment has full liquidity with a guaranteed cash refund death benefit; it also allows a participant to purchase future income through dollar cost averaging. Using dollar cost averaging, a participant can limit the interest rate risk faced when making a single purchase of an annuity at retirement, said Mr. Eck.
ClearCourse, offered by Genworth Financial Inc., Richmond, Va.; and Personal Pension Builder, provided by Merrill Lynch Retirement Group, Pennington, N.J., and MetLife Inc., New York, are the two other annuity options now available to 401(k) plans.
Mr. Eck said the investment option will be especially attractive to sponsors that are freezing their defined benefit plans and looking to enhance their defined contribution programs.
"As pension plans wane and Social Security becomes less and less of a participant's guaranteed income, we believe this product will resonate with a majority of participants. Plan sponsors say that it looks and feels like a pension plan and will strengthen their employee benefit offerings," said Mr. Eck.
Stephen Shepherd, Hartford director of product development, added: "It's about replacement income. This is the option that plan sponsors like a lot. If you're scaling back your DB plan, this is a perfect segue from DB to DC. This option looks a lot like a pension plan."
Hartford Life made the product available in late June, and is targeting 401(k) plan sponsors with assets of $500 million and more, said Mr. Eck.