<!-- Swiftype Variables -->

Diana Winalski, International Paper

Taking steps to make sure retirees had options needed to keep the income flowing

Diana Winalski added two features to International Paper’s 401(k) to aid retiree income.

Seeking to encourage retiring employees to stay in two International Paper Co.'s 401(k) plans and to ensure post-retirement income, Diana Winalski added two components to the plans.

She added a long-bond investment option as well as a service from Hueler Cos. that allows participants to review various annuity options that they can choose when they retire.

"You do need to offer them friendly options," said Ms. Winalski, the Stamford, Conn.-based head of 401(k) product management. The two plans have combined assets of $5.8 billion and some 49,000 participants.

The long-bond investment option was added primarily to improve retirement payout rates — part of the company's stay-in-the-plan efforts, she said.

The Long Bond Fund, launched in January, uses the Bloomberg Barclays Long Government/Credit Index,which has an allocation of 51% corporate bonds and 49% government bonds, she said.

The duration of the Long Government/Credit Index is 14.7 years compared to the six-year duration of the Bloomberg Barclays Aggregate Bond Index. The latter index is used for the U.S. Bond Fund in the 401(k) lineup.

Initially, among plan executives, "there was some concern about adding a long-bond fund to our investment lineup, as some thought it might be considered a risky investment option when viewed in isolation," Ms. Winalski wrote in her application, which led to her receiving an Excellence Award.

"However, we pointed out the diversification benefits of long-duration bonds and argued that they could play as important a role in asset/liability management for individuals as they do for pension plans. We also showed how adding a long-bond option could provide Income+ users with up to 10% higher payouts in retirement."

Income+ is a managed account program from Financial Engines, which International Paper added in 2013 and has made available to employees 55 and older.

Ms. Winalski added that International Paper executives wanted to be sure that any annuity product or service would not be considered an in-plan option due to "fiduciary liability concerns."

As such, the plan's communications make clear that the Hueler service was an out-of-plan option.

The Hueler Income Solutions service provides names of pre-screened providers with information on quotes, credit ratings and product features. Hueler acts as a platform for the annuity providers, she said.

"A participant can purchase an annuity with in-plan assets that, in turn, roll out of the plan to purchase the annuity," she said. "A participant is also permitted to use other retirement savings or after tax savings outside of the plan."

Employees "pay for the annuity at the point of purchase, and that can be while they are still working," she added.

"The DC landscape was a way to reduce the employer from the retirement security equation, and Diana with IP is trying to care for their employees across a lifetime and not just while they work for IP," wrote one judge.

"I like that they have made it their objective to try to retain assets in plan and offer a full suite of distribution options," another judge wrote.