A news release said Merrill is working with MetLife to provide Personal Pension Builder in which every contribution made is immediately converted to a specific future income benefit similar to a defined benefit plan.
The product has two phases – the accumulation phase, when employees purchase through current salary deferrals guaranteed sources of future income, and the retirement phase , during which employees receive a fixed monthly amount for as long as they live.
The accumulation phase offers three guarantees:
- a specific future income benefit amount purchased at current prices
- the income participants accumulate for retirement is guaranteed for life or a period of their choice based on the annuity purchase rate (including interest rate) being offered by MetLife on the date a contribution is made
- the beneficiary will receive a death benefit equal to the current commuted value of the annuity if the employee dies during the accumulation period. Or, a spousal beneficiary can elect to convert that value to an annuity.
Additional product benefits include:
- the ability to reduce interest rate risk by averaging purchase rates over time, since each contribution purchases future income based on the then current rate
- the flexibility to adjust contributions and to make lump sum transfers from other 401(k) options at any time to ensure the desired level of income at retirement
- the ability to select income options that provide continuing income to someone else in the event of death
- the option of taking some or all of the accumulated income benefit in cash within 60 days following the benefit start date.