Investment Product and Service Launches

Fidelity Goes National With 401(k)-to-Income Annuity Offering 

Fidelity Investments has added another option for an annuity-driven “pension-like” paycheck from defined contribution retirement plans. 

Fidelity’s Guaranteed Income Direct, now available to plan sponsors nationally after it was initially presented by the firm in 2021, gives participants an option to convert 401(k), 403(b) or 457(b) savings into an immediate income annuity that will produce a steady paycheck in retirement—solving for the oft-discussed decumulation problem among employer plan participants and American savers. 
 

The offering gives participants the choice of purchasing an income annuity directly through an employer’s plan benefit from a third-party insurer selected by the employer, according to an emailed response from Keri Dogan, Fidelity’s senior vice president of financial wellness and retirement income solutions. Those assets leave the retirement plan and go to the insurer for purchase, with monthly cash flow views available through the benefits platform, NetBenefits. 
 
“This process benefits the participant by avoiding any possible portability issues,” Dogan explains, noting also that “the participant can view information on the third-party insurers selected by their employer in order to make an informed decision on their purchase.” 
 
Plan sponsors will not have a charge associated with adding the services, though fees may be charged for amending plan documents to allow for an annuity as a distribution option. The platform currently includes annuity options fromMetLife, Pacific Life, Prudential Financial and Western & Southern Financial Group, with more to be added in the future, according to the announcement. Fidelity partnered with Micruity Inc., a clearinghouse for annuity-related data, to create the digital platform. 

Prudential Announces SimplyIncome for Workplace Plans 

In a separate announcement from Fidelity, Prudential Financial Inc. noted the launch of SimplyIncome, a single-premium immediate annuity, or SPIA, for employer-based retirement programs being administered by Fidelity.  

Prudential is one of multiple insurers on Fidelity’s Guaranteed Income Direct platform, with its offering going to more than 100,000 plan participants, according to Prudential.  

Ann Nanda, head of future growth initiatives and distribution enablement at Prudential Retirement Strategies, noted that the collaboration with Fidelity helps expand access to retirement security for more consumers and aligns with a key Prudential business priority to deliver retirement income in new ways. 

“Prudential SimplyIncome is an example of how we are co-creating innovative solutions for employer-based retirement plans, in this case working with a top plan administrator to bring a protected income option to plan sponsors and participants within a system they already know,” Nanda said in a statement.  

Prudential makes more than $12 billion in protected income payments to customers every year. 

Betterment at Work Launches Small Business Student Loan 401(k) Matching  

Financial benefits provider Betterment at Work has launched a platform for small businesses to provide employees with a 401(k) company match to the employees’ student loan repayments if they are using Betterment’s 401(k) services.  

The benefits offering allows qualified student loan repayments to count as elective deferrals that are eligible for a company match from a small employer. Employees with access to Betterment’s 401(k) can record their loan payments within the platform, according to the firm. Employers can choose to make the match annually, even if education debt payments are made on a per-payroll basis.  

“We know that student debt can be a major impediment to saving for retirement,” Sarah Levy, Betterment’s CEO, said in a statement. “Our industry-first student loan 401(k) matching solution is a compelling addition to our modern 401(k) that will help to broaden plan participation to those whose student debt previously kept them from saving for retirement.”