BlackRock has made its annuity-embedded target-date fund available to some 8,500 U.S. employees eligible to participate in the company's 401(k) plan.
In an employee memo shared exclusively with Pensions & Investments, Larry Fink, BlackRock chairman and CEO, and Caroline Heller, global head of human resources, announced that the BlackRock LifePath Paycheck target date fund, or LPP, is now the default investment option for participants in BlackRock's retirement savings plan.
“Retirement is core to our business,” the executives said in the memo. “More than half of the assets we manage globally help people retire with dignity, and LPP is the latest development in our long history of making saving for the future easier and more accessible for more people.”
As of Dec. 31, the BlackRock Retirement Savings Plan had $4.1 billion in assets, according to its most recent Form 5500 filing.
The BlackRock LifePath Paycheck target-date series acts like an ordinary target-date fund until participants hit age 55, at which point the fund allocates 10% of the balance to a new asset class called “lifetime income.” The allocation to lifetime income grows gradually to 30% by the time participants reach 65.
When participants are between the ages 59 ½ and 71, they have the option to use the money set aside for lifetime income to purchase an annuity from insurers selected by BlackRock.
The asset manager went live with the product in April amid media fanfare. Of the 15 plan sponsors that have committed to adding the product to their investment lineups, six – including BlackRock – have already made the product available to their participants.
Three of the six plan sponsors that have publicly disclosed making LPP available are Avangrid, Adventist Healthcare Retirement Plans and Tennessee Valley Authority Retirement System. BlackRock would not disclose the other two plan sponsors or how much the six employers have in the LPP product.
