Guaranteed Income: The Value Of An In-Plan Option
Individuals approaching retirement face a big shift — from saving for retirement to generating predictable income in retirement. One of their biggest concerns is making sure they don’t outlive their savings, and they’re looking to their retirement plan sponsors for help.
New investment option provides known, guaranteed income
Available now for most defined contribution plans, Principal Pension BuilderSM lets participants build a guaranteed stream of income for life — much like Social Security or income from a defined benefit plan — by directing a portion of their retirement plan contributions into a deferred income annuity.1
Why offer an in-plan option?
As part of a retirement plan’s investment lineup, Principal Pension Builder offers a number of benefits:
- It can help participants manage risk, diversify their income sources and ultimately retire on time and with confidence.
- It broadens the plan’s lineup to include not just accumulation, but also retirement income products — helping you manage your fiduciary responsibility to provide a range of investment choices.
- Helping employees retire on time can boost your bottom line through decreased healthcare expenses and more engaged and productive employees.
There is also growing need and interest in this type of solution:
- 75 percent of plan sponsors agree organizations should play a role in helping employees turn their retirement savings into income.2
- More than 80 percent of pre-retirees say they would be interested in an in-plan investment option that would provide monthly income guaranteed for life.3
With the guarantee comes flexibility
When they near retirement, participants select the age they want to start receiving guaranteed income payments and what form their payments will take. If they leave the plan prior to reaching retirement age, the Principal Financial Group® will issue the deferred annuity certificate to the participant. Or, the funds can remain in the plan until their payment start date. No additional contributions will be allowed to Principal Pension Builder.
If the plan sponsor changes service providers, The Principal® will continue to administer the Principal Pension Builder product, including providing annual 5500 services. Participants can no longer contribute to Principal Pension Builder.
Get more information
To learn more about providing this guaranteed income option within your organization’s retirement plan, talk to your plan’s financial professional or your representative of The Principal.
1 The ability of Principal Life Insurance Company to pay the guarantee is based on the claims-paying ability of the general account and is subject to the terms of the contract.
2 Chatham Partners Satisfaction Survey, November 2014.
3 The Path Forward: DC Participants Want More, Northern Trust, May 2015.
Principal Pension Builder is a deferred income annuity rider available through certain group annuity contracts with Principal Life Insurance Company, a member of the Principal Financial Group®, Des Moines Iowa 50392. Principal Pension Builder may not be available in all states.
Principal Pension Builder provides for the purchase of deferred income annuities that provide guaranteed income in retirement. Guaranteed income may change due to elections by the plan fiduciary or participant, such as changing the income start date or annuity form. Funds transferred and contributions used to purchase guaranteed income through Principal Pension Builder will no longer be subject to market gains or losses. In exchange, the participant is purchasing a guaranteed future income stream.
Insurance products and plan administrative services are provided by Principal Life Insurance Company, a member of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.