Fidelity to Launch Target-Date CITs With Embedded Guaranteed Income Option

Fidelity Investments announced Fidelity Freedom Lifetime, a suite of target-date collective investment trusts with built-in guaranteed income options that will be available to plan sponsors on Fidelity’s recordkeeping platform in early 2027.

Certain CITs will include an allocation to a lifetime income insurance pool offered through Nationwide Mutual Insurance Co. and New York Life Insurance Co. Between ages 59.5 and 78, participants have the option to use some or all of the money associated with their insurance exposure to purchase an annuity that begins payments immediately. The suite utilizes a blended investment approach—investing in a mix of active and indexed underlying funds—while using active asset allocation across a variety of asset classes.

“In designing Freedom Lifetime, our priority was to maximize the value of lifetime income while keeping the participant and plan sponsor experience simple and easy to adopt,” said Molly Cunningham, head of Fidelity’s workplace lifetime financial help program, in a statement. “Along with Fidelity’s deep target-date and asset management expertise, employees can benefit from Fidelity’s integrated and holistic support including education, tools, and dedicated live, one‑on‑one support to help employees create a retirement plan that fits their goals.”

Participants invested in Freedom Lifetime will have access to a digital interface integrated through Fidelity’s recordkeeping platform. The interface will allow users to model scenarios to illustrate potential income in retirement and, when eligible, to obtain guaranteed income quotes and purchase lifetime income at retirement, allowing them to convert a portion of their savings into guaranteed payouts.

Freedom Lifetime will leverage asset-based pricing between 0.14 and 0.27 basis points, varying by share class and vintage, consistent with Fidelity’s existing Freedom Blend CITs. The portfolio management team will include Managers Andrew Dierdorf, Cait Dourney Earle, Finola McGuire Foley and Brett Sumsion, who manage all of Fidelity’s U.S. target-date funds. The managers will not use the historical performance of another product to represent Freedom Lifetime performance.

With its launch of Freedom Lifetime, Fidelity joined firms such as TIAA and BlackRock in a recent-years trend of adding guaranteed income products, particularly income-embedded TDFs, to defined contribution plans.

According to Sway Research’s “The State of the Target-Date Market: Mid-Year 2025” report, assets in target-date investments with embedded income features totaled $103 billion on June 30, up 25% from $83 billion at the end of 2024.

An average of nine out of 10 respondents to MetLife’s 2026 Lifetime Income Poll said they believed the core purpose of a DC plan should be to serve participants as a source of income in retirement. Data from the 2026 PLANSPONSOR Plan Benchmarking Report revealed that 73.4% of plan sponsors said it was important that their plan offer participants a means to guarantee some level of retirement income.