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Retirement Income Templates

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If you don't know where to start your in-plan Retirement Income product analysis or what criteria to consider, we've got you covered.  The criteria below are suggested criteria by Broadridge, which, at a minimum, we feel demonstrates a prudent analysis.  

 

Accumulation Phase Template - This template contains criteria that consider the payout phase but places an emphasis on the accumulation phase.  Retirement plans most likely to utilize this template would have a demographic of participants in the accumulation phase of their life.  These participants would largely be concerned with asset accumulation, liquidity, rollover availability, growth, and additional contributions.

 

Display Fields

  1. Inception Date: Date the product was first offered
  2. Last Modified Date: Date the product was last modified
  3. Product Type: The type of investment product:
    1. Group Deferred Fixed Rate Annuity (Flexible Premium) (FRA)
    2. Group Deferred Income Annuity (Flexible Premium) (DIA)
    3. Group Deferred Variable Annuity (Flexible Premium) (VA)
    4. Contingent Deferred Annuity (CDA)
    5. Individual Deferred Fixed Indexed Annuity (Flexible Premium) (FIA)
    6. Group Deferred Fixed Rate Annuity (Single Premium) (FRA)
    7. Single Premium Immediate Annuity (SPIA)
    8. Target Date Fund (TDF)
    9. Balanced Fund (BF)

Score Criteria

  1. Plan Segment Targeted: Size of plans targeted by the product: 
    1. Small Market (under $10M)
    2. Mid Market ($10M-$100M)
    3. Large Market ($100M - $250M)
    4. Mega Market ($250M+)
    5. All Markets
    6. Unknown
  2. Plan Type - Availability: Which plan types are available: 401(a), 401(k), 403(b), 457
  3. Fees & Expenses - Explicit Description: An explicit fee is one that is disclosed in writing and is directly associated with a given product feature. This can come in a variety of forms such as a fund expense or the expense of a lifetime income feature that is charged against assets. Describes the explicit fees within the offering, and how they are applied during accumulation and payout
  4. Fees & Expenses - Implicit Description: An implicit fee or expense is a deduction from the rate of return that an insurer targets when setting interest crediting rates. Although not technically a “fee,” a deduction target like this is also called a “spread” which is embedded within a product and is not disclosed. Items included in the target spread may include the amounts to help defray the costs of operating and distributing the product; investing and managing assets to support guarantees; plan and participant servicing (if applicable); or build capital to absorb risks associated with guarantees and to provide an appropriate return on that capital in light of the insurer’s financial strength aspirations. These amounts are typically realized by the insurer as the actual “spread” between the income the insurer receives on the assets supporting the guarantees and the return (interest crediting rate) the investor receives. Although the insurer accounts for a target spread when setting interest crediting rates, there is no guarantee that the insurer will actually achieve the spread it had targeted. Similar to a bank-issued certificate of deposit, this approach to covering expenses is typically found in a deferred fixed rate annuity used during accumulation.  Describes the implicit fees within the offering, and how they are applied during accumulation and payout
  5. Portability- Availability: The ability to transfer a participant’s accrued lifetime income benefit to another recordkeeper or a plan, including an IRA.  Is the product designed to be portable to another recordkeeper and/or product? 
  6. Recordkeepers: Lists the Recordkeepers
  7. Rollover Option - Available: The ability of the participant to take a distribution and retain their assets and/or accrued lifetime income benefit within another retirement plan or individual account. Some lifetime income rollover options retain the same solution as available inside the plan while others provide a similar replacement.  Are rollovers allowed?
  8. Account Value Growth: Describes how the account value grows based on its investments. In some cases, with annuitization offerings, there is no account value
  9. Liquidity - Ability to Transfer out Availability (Accumulation): Can transfers/withdrawals be taken? 
  10. Liquidity- Impact to Income: Describes how the benefit value is impacted when withdrawals are taken:
    1. Dollar for Dollar
    2. Proportional
    3. Liquidation starts with the most recent contribution, then each preceding contribution (LIFO)
    4. N/A
  11. Surrender Charges (Accumulation): Are there surrender charges when withdrawals/transfers are made?
  12. MVA (Accumulation): Is there MVA when withdrawals/transfers are made?
  13. Longevity Protection- Availability: The protection against the risk of outliving one’s assets provided by guaranteed payments for life from an annuity.  Is the payout amount protected against outliving the income? 
  14. Liquidity - Ability to Transfer Out - Availability (Payout): Can transfers/withdrawals be taken? 

 

Payout Phase Template - This template contains criteria that consider the accumulation phase but places an emphasis on the payout phase.  Retirement plans most likely to utilize this template would have a demographic of participants closer to the payout phase of their life.  These participants would largely be concerned with protection of principal, withdrawals of excess funds during payout, and surrender fees.

 

Display Fields

  1. Inception Date: Date the product was first offered
  2. Last Modified Date: Date the product was last modified
  3. Product Type: The type of investment product:
    1. Group Deferred Fixed Rate Annuity (Flexible Premium) (FRA)
    2. Group Deferred Income Annuity (Flexible Premium) (DIA)
    3. Group Deferred Variable Annuity (Flexible Premium) (VA)
    4. Contingent Deferred Annuity (CDA)
    5. Individual Deferred Fixed Indexed Annuity (Flexible Premium) (FIA)
    6. Group Deferred Fixed Rate Annuity (Single Premium) (FRA)
    7. Single Premium Immediate Annuity (SPIA)
    8. Target Date Fund (TDF)
    9. Balanced Fund (BF)

Score Criteria

  1. Plan Segment Targeted: Size of plans targeted by the product: 
    1. Small Market (under $10M)
    2. Mid Market ($10M-$100M)
    3. Large Market ($100M - $250M)
    4. Mega Market ($250M+)
    5. All Markets
    6. Unknown
  2. Plan Type - Availability: Which plan types are available: 401(a), 401(k), 403(b), 457
  3. Fees & Expenses - Explicit Description: An explicit fee is one that is disclosed in writing and is directly associated with a given product feature. This can come in a variety of forms such as a fund expense or the expense of a lifetime income feature that is charged against assets. Describes the explicit fees within the offering, and how they are applied during accumulation and payout
  4. Fees & Expenses - Implicit Description: An implicit fee or expense is a deduction from the rate of return that an insurer targets when setting interest crediting rates. Although not technically a “fee,” a deduction target like this is also called a “spread” which is embedded within a product and is not disclosed. Items included in the target spread may include the amounts to help defray the costs of operating and distributing the product; investing and managing assets to support guarantees; plan and participant servicing (if applicable); or build capital to absorb risks associated with guarantees and to provide an appropriate return on that capital in light of the insurer’s financial strength aspirations. These amounts are typically realized by the insurer as the actual “spread” between the income the insurer receives on the assets supporting the guarantees and the return (interest crediting rate) the investor receives. Although the insurer accounts for a target spread when setting interest crediting rates, there is no guarantee that the insurer will actually achieve the spread it had targeted. Similar to a bank-issued certificate of deposit, this approach to covering expenses is typically found in a deferred fixed rate annuity used during accumulation.  Describes the implicit fees within the offering, and how they are applied during accumulation and payout
  5. Death Benefit- Type: Type of death benefit value:
    1. Account Value
    2. Return of Premium
    3. Greater of Accumulation Value, Cash Surrender Value, Cumulative Withdrawal Amount, or Guaranteed Minimum Value
  6. Recordkeepers: Lists the Recordkeepers
  7. Account Value Protection - Availability: Describes if the account value is protected in the accumulation phase
  8. Accumulation Protection - Benefit Value: Some guaranteed retirement income solutions include a contractual provision to provide accumulation protection in one of two forms, depending upon product structure. The first would be Account Value protection where there is an interest rate guarantee or a guaranteed floor to the rate of return. The second is a Lifetime Income Benefit protection which accumulates over time prior to the start of income. For example, a Benefit Base Value is a separate value from which a guaranteed withdrawal percentage is applied for a lifetime payment. The value of a Benefit Base can grow in alignment with growth in Account Value or it may depend on a separate calculation. However, if the Account Value were to decline, the Benefit Base will not (assuming there are no transfers out prior to income start).  Is there protection of the benefit value in the accumulation phase, or can it lose value? 
  9. Longevity Protection- Availability: The protection against the risk of outliving one’s assets provided by guaranteed payments for life from an annuity.  Is the payout amount protected against outliving the income? 
  10. Account Value Protection- Availability: Detailed description of the income solution in the payout phase. Includes detail about initiating income start, investments & growth, protection, and where assets remain protection, and where assets remain
  11. Payout Adjustments: Guaranteed income payments can either remain flat (i.e., level) over the course of a lifetime or they can change depending upon the design of the lifetime income solution. Some adjustments can be selected as an option by the participant at income start (i.e., an annual fixed percentage increase of the payment) or may increase or decrease due to the performance of the investments or other factors.  Describes how the payout may be adjusted in the payout phase, either by the insurer, through additional contributions, or through elected options
  12. Liquidity - Ability to Transfer Out - Availability (Payout): Can transfers/withdrawals be taken? 
  13. Surrender Charges (Payout): Are there surrender charges when withdrawals/transfers are made?
  14. MVA (Payout): Is there MVA when withdrawals/transfers are made?

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