BlackRock Creates Retirement Paycheck

Two insurers have joined the effort to make lifetime income available in a simplified manner.

BlackRock has announced that it has created a solution to provide Americans with simplified access to lifetime income throughout their retirement. It has partnered with insurers Equitable and Brighthouse Financial in the effort.

The new product, LifePath Paycheck, will be provided through defined contribution (DC) plans and will be accompanied by a digital platform that is built on the Microsoft Azure cloud platform.

LifePath Paycheck is a target-date strategy that includes an allocation to annuity contracts. These annuity contracts will not limit the daily liquidity of the target-date strategy. Once the account holders reach retirement, they will have the option to use a portion of their account balance to purchase fixed individual retirement annuities that will provide guaranteed lifetime income.

“LifePath Paycheck is an investment solution that will give people simplified access to guaranteed income through their 401(k),” Anne Ackerley, head of BlackRock’s retirement group, tells PLANSPONSOR. “The experience is available through both a digital and a web-based application. It helps people understand how much they will get in income through the target-date strategy, a strategy people are already familiar with. We have been able to bring together the insurance companies, recordkeepers and technology companies to make it much easier for people to save for lifetime income.”

Ackerley notes that the annuities will be institutionally priced and dollar cost averaged. “We know that if we ask someone if they would like guaranteed income, they say yes. This removes the complication of having to find an insurance company, figuring how much to annuitize and when to buy,” Ackerley says. “All of that has been decided for people.”

BlackRock first announced its partnership with Microsoft on this program in December 2018. At that time, the firm said it was undertaking this task because of the decline of defined benefit (DB) plans and the shift of the responsibility for saving adequately for retirement to individuals. BlackRock said technology had been revolutionizing everything from health care to education to transportation—but retirement solutions were slow to keep pace.

“Retirement systems worldwide are under stress and providing financial security to retirees has become one of the most defining societal challenges of our time,” said Laurence Fink, chairman and CEO of BlackRock, at the time. “BlackRock has a tremendous responsibility to help solve this challenge. … Working with Microsoft will enable us to build a powerful solution for millions of hardworking Americans.”