In the announcement, BGI explained that SponsorMatch is a new investment category for defined contribution plans that seeks to enhance the matching component of a company’s 401(k) plan, in part by providing annuity income to the participant when in retirement (See The Bottom Line: The Silver Tsunami ). Rather than invest company match contributions in company stock or investments predetermined by plan participants, SponsorMatch provides access to an investment vehicle that combines a target date fund with institutional investment strategies managed by BGI and the addition of a deferred fixed income annuity element provided by MetLife to turn a component of the employer match into a future stream of guaranteed income.
SponsorMatch seeks to control exposure to market risk over time by increasing the funding to, and therefore the level of the annuity payout provided by MetLife, as the participant ages. As an example, the announcement said, the annuity allocation might start at 5% at age 25 and grow to 53% at retirement.
It is designed to integrate with traditional DC recordkeeping platforms to allow for daily liquidity and to meet the criteria for a qualified default investment alternative (QDIA).
“The matching component of a company’s 401(k) plan has been drastically under utilized as a participant benefit,” said Kristi Mitchem, head of BGI’s U.S. defined contribution business, in the announcement. “With SponsorMatch, plan participants benefit from the annuitization of retirement income, which is similar to the income stream enjoyed by individuals with access to traditional pension plans.”
The three basic components of the SponsorMatch program are:
- The income portfolio from MetLife that holds deferred annuities and is designed to provide an income stream after age 65.
- The beta portfolio that is designed to capture market returns and is invested in line with the asset allocation policies of the 200 largest retirement plans in the world.
- The institutional alpha portfolio that is designed for enhanced return potential.
More information is at www.barclaysglobal.com .
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