Principal® Broadens Retirement Income Offering with New Options
(DES MOINES, Iowa)—Principal Financial Group®,is expanding its Principal® income suite with additional offerings designed to help Americans turn retirement savings into dependable income. The new savings vehicles with the ability to generate lifetime income can be available within an employer’s defined contribution investment lineup and include the Principal® LifeTime Income Builder Index collective investment trusts (CITs) target date funds (TDFs).
The expansion comes as today’s workforce navigates a more complex retirement reality. Fewer workers have access to traditional pensions; people are living longer, and market uncertainty can make it challenging to convert savings into steady income.
In response, plan sponsors and their financial professionals are looking for ways to help employees build assets and confidently access them in retirement. With the additions to the Principal income suite, Principal is curating a broader selection of proprietary and third-party Qualified Default Investment Alternative (QDIA)-eligible products which plan sponsors can choose to use when helping plan participants flow from saving for retirement to receiving dependable income in retirement.
“Our plan sponsor clients are looking for ways to make retirement simpler and more predictable for their employees,” said Chris Littlefield, president of Retirement and Income Solutions at Principal. “By increasing options within the Principal income suite, we are delivering a more integrated approach to retirement to support participants as they move from accumulation to income, without adding complexity. There has been strong demand for retirement income solutions, and we are focused on evolving our product offerings to meet this need.”
Proprietary and Third-Party Retirement Income Options
Retirement income products available through the Principal income suite will soon include Principal LifeTime Income Builder Index, a QDIA-eligible option with a growth-oriented, passively invested TDF portfolio that begins allocating to a fixed indexed annuity about age 47. With minimal participant decisions required, the TDF automatically transitions to distributing 6% income at around age 65.*
Principal is also adding third-party retirement income TDF series through new strategic partnerships with TIAA/Nuveen, the LifeCycle Income Index (The trustee for the NLI CIT series is SEI Trust Company) and Income America 5forLife.
Delivering More, Simplified Process for Savers
The growing number of options offered reflects the enduring commitment by Principal to continuously innovate, partner, and evolve its product portfolio and client service offering to help meet the changing needs of today’s savers and plan sponsors. Across more than 46,000 employers and 13+ million individual customers, the company is continuously investing with a clear focus on helping individuals plan, save, and generate income with greater confidence, now and into the future.
*6% is a targeted percentage for a single life payout and there is no assurance the target date fund (Fund) will be able to make payments that meet this percentage. 4.5% of the annual income is designed to come from the fixed indexed annuities (FIAs) purchased by the Trustee for the benefit of the Fund and is subject to the claims-paying ability of the issuing insurance companies and terms of the FIA contract. 1.5% of the annual income is designed to come from the Fund's other assets until those assets are exhausted. Actual percentages may vary. See Important Information regarding actual percentages and information if a joint life payout is elected. You can also access the Fund Offering Memorandum at : https://principallifetimeincomebuilder.s3.us-east-1.amazonaws.com/offeringmemorandum
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About Principal Financial Group®
Principal Financial Group® (Nasdaq: PFG) is a global financial company with approximately 19,000 employees
About Principal LifeTime Income Builder Index CIT series About Target Date investment options: The target date funds (Funds) are designed for investors expected to retire around the year indicated in each Fund’s name, or at about age 65 (or age 67 for certain late-in-career participants using the catch up Funds). When choosing whether to invest in the Fund for which an investor’s age qualifies, investors should consider whether they anticipate a need for an income stream significantly earlier or later than the stated year, which is the approximate date an investor may wish to start withdrawing money. As each Fund approaches its target date, the investment mix becomes more conservative by increasing exposure to generally more conservative investments and reducing exposure to typically more aggressive investments. Neither the principal nor the underlying assets of target date portfolios are guaranteed at any time. There may be other considerations relevant to determining whether investment in the Fund best meets your individual circumstances and investment goals. The Funds’ asset allocation strategy becomes increasingly conservative as it approaches the target date and beyond. The investment risks of each Fund change over time as its asset allocation changes – investment risk remains at all times.
Important Information
Investing involves risk including the risk of loss of principal. Such activities may not be suitable for everyone. Asset allocation and diversification does not ensure a profit or protect against a loss. Equity investment options involve greater risk, including heightened volatility, than fixed-income investment options. Fixed-income investments are subject to interest rate risk; as interest rates rise their value will decline. International and global investing involves greater risks such as currency fluctuations, political/social instability and differing accounting standards. These risks are magnified in emerging markets. The performance and risks of a fund of funds directly correspond to the performance and risks of the underlying funds in which the Fund invests.
Investment option fees are designed to change 18 years prior to the Fund’s target date (See the Fund fact sheet at principal.com for additional information on Fund and fees that applies to you).
A window opens 130 business days prior to the Fund’s target date to select a single or joint life income and closes 10 business days prior to the Contribution Cut-Off Date as designated on the specifications page for the Fund included in the Offering Memorandum for the Fund. Default will be to the single life payout if there is no election for a joint payout (See information below regarding joint payout).
There is no guarantee that a target date investment will provide adequate income at or through retirement. Each target date fund in the series is established by Global Trust Company and held in the GTC Retirement Income Builder Collective Investment Trust (the “Trust”). The Trust is a bank-sponsored collective investment trust and not a mutual fund and is not registered with the Securities and Exchange Commission. Global Trust Company serves as trustee of the Trust, maintains and manages the Trust, and has ultimate investment authority for each fund in the series. Global Trust Company has retained Principal Asset Management® to serve as the glidepath manager to provide Global Trust Company asset allocation recommendations and glidepath recommendations for the underlying funds and separate accounts within the series. Principal Life Insurance Company® is the investment manager to the separate accounts.
Principal LifeTime Income Builder Index is a collective investment trust target date fund (Fund) series that invests in a growth-oriented portfolio and beginning at approximately age 47 in group fixed indexed annuity contract(s) with a lifetime withdrawal benefit (a “FIA”). Each Fund may invest in more than one FIA, which are collectively referred to throughout as “Lifetime Income Builder.” Vitera, LLC is the inventor of the Lifetime Income Builder solution. The FIA contact is made to the Fund by the issuing insurer, but not to the individual participants and is subject to the claims paying ability of the insurer and the conditions of the FIA contract. Participants are not beneficiaries of any annuity contract. Lifetime Income Builder is not provided by or guaranteed by Global Trust Company, Principal Asset Management®, Vitera, LLC or any of their affiliates or by any member company of the Principal Financial Group.
Each Fund is designed to provide participants with a target annual income of 6% at income activation and a target minimum lifetime income percentage of 4.5% (single life payout). The target percentages are goals and there is no assurance that the target date fund will be able to make payments that meet either target percentage.
If the value of the other investments in the Fund reaches zero at or after income activation, income payments are adjusted to the minimum target percentage provided to the Fund by the FIAs, which is currently targeted to be the target minimum lifetime income percentage of 4.5% for a single life payout (less for joint life payout). The actual target annual income percentage and actual target minimum lifetime income percentage are dependent on economic factors and may be more or less than what is targeted. There are possible market conditions where the FIAs’ cumulative guaranteed percentage that is provided to the Trust could be less than 4.5%. Therefore, we use the term “target” to properly reflect the potential for such scenario.
Joint life income –If a participant selects the joint income option offered by the Fund, the actual target payment percentages will be less than the 6% and 4.5% targets, and instead of income payments terminating upon the death of the participant, income payments will continue to be made to the joint beneficiary if the joint beneficiary outlives the participant. Target percentages for joint income option are 90% or 80% of the single life targeted percentages, depending on the difference in age between the participant and the joint beneficiary. If no election is made, income will default to a single life payout.
Catch up target date fund (TDF) investment options – Inspired by the Internal Revenue Code permitting individuals age 50 and older to make catch up contributions, the catch up TDFs are designed for participants first investing in the TDFs later in their career. The catch up TDFs have both a shorter contribution period for allocation to the FIA contracts and a delayed income activation date (at or about 67 instead of 65). However, catch up TDFs follow the same glidepath design and target the same target annual income percentage of 6.0% and target minimum lifetime income percentage of 4.5% (calculated based on amounts contributed by the last day of the month prior to income activation). Those seeking to accumulate larger amounts to support larger income payments may wish to start contributing to the plan and the TDFs earlier in their career. For more information pertaining to the catch-up funds see the specification pages in the Offering Memorandum : https://principallifetimeincomebuilder.s3.us-east-1.amazonaws.com/offeringmemorandum
All of these target percentages are goals and there is no assurance that the Fund will be able to make payments that meet any target percentage. Further, withdrawals or transfers taken out of the Fund or outstanding loan balances at the stated target date will decrease the income stream. Current target annual income and target minimum lifetime income percentages reflect economic conditions at the time each target date fund is created. Future target date funds in the series could have lower or higher targeted percentages based on economic conditions at the time of the target date fund’s creation.
An investment in a target date fund is not a bank deposit and is not insured or guaranteed by the insurance companies, the trustee, Principal Asset Management or any member of the Principal Financial Group®, the Federal Deposit Insurance Corporation (“FDIC”), or any other government agency. The Trust is not insured by the FDIC and is not registered with the Securities and Exchange Commission.
Each FIA is issued by an insurance company to each Fund. The FIAs do not create any third-party beneficiary relationships or third-party beneficiary rights for any other person or entity. The insurers do not guarantee that participants will receive lifetime income.
The information provided herein does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security or a product, or a recommendation of the suitability of any investment strategy for a particular investor. Material presented is prepared from information sources believed to be accurate, but there is no guarantee of accuracy. It does not take into account any investor’s particular objectives, strategies, tax status or investment horizon.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without Global Trust Company's express written consent. The entities reflected here have collaborated together to bring this solution to market; none of the collaborating listed entities are affiliated entities.
Global Trust Company and Vitera, LLC are not affiliated with any member of the Principal Financial Group®.
News Release Contact
US retirement
Lauren Vespa