John Hancock Retirement Plan Services introduced a guaranteed income feature for its new 401(k) plan clients. The optional rider is one of a wave of recent efforts by 401(k) providers to offer steady income to retirees.
The rider permits participants to obtain a lifetime income of 5% of their account balance at the time of distribution, starting at age 59 1/2. If the market value of the account rises, the benefit goes up proportionately, creating a new benefits floor. The rider also offers downside protection; the guaranteed income will not fall from its peak level. Participants who opt for the rider will pay a fee of 35 basis points on their balance.
Edward Eng, senior vice president, said the rider has been included in 25 new contracts signed since the end of January. John Hancock officials plan to make the rider available to existing clients later this year, he said. John Hancock manages $50 billion in 401(k) assets for 1.6 million participants in 40,000 plans.
