Amid the paucity of workers taking advantage of in-plan guaranteed income options, there's still a diversity of plan designs now in effect — ranging from annuities to qualified longevity annuity contracts to non-annuity guaranteed minimum withdrawal products.
"We're in the first quarter of retirement income," said Tim Pitney, managing director of investment distribution at TIAA-CREF, New York, using a football analogy.
TIAA has been offering annuities since its founding in 1918. Nine years ago, it launched its first customized target-date portfolio with an embedded annuity. In 2018, it offered the revised version, TIAA RetirePlus Pro, an asset-allocation service that incorporates the organization's TIAA Traditional Annuity, a fixed annuity, in a customized portfolio.
Mr. Pitney said TIAA has 250 clients for its TIAA RetirePlus Pro service as a qualified default alternative investments. The largest client has more than $7 billion in DC assets while the smallest has about $5 million. Aggregate assets committed to the service exceed $18 billion, he said.
TIAA RetirePlus Pro offers three glide path approaches — conservative, moderate and aggressive. The portfolio typically contains 10 to 14 vintages — different years aligned to participants' expected retirement dates — depending on the recommendation of a plan's consultant, Mr. Pitney said.
"During accumulation, the liquid fixed annuity sleeve provides bond-like returns over time with near zero volatility," said Mr. Pitney, explaining that "liquid" means participants can move their money out without penalty.
"At retirement we offer participants the option but not the obligation to turn accumulated savings into income that can't be outlived," he said. In the decumulation phase, "the fixed annuity allocation provides steady income in retirement that can't be outlived."