Metropolitan Life Insurance Company is introducing an income annuity feature that can protect purchasers against rapidly rising prices.[@@]
Metropolitan Life, a unit of MetLife Inc., New York, is selling the feature through its Guaranteed Income Program, which helps employees convert defined contribution plan assets or other retirement plan assets into streams of retirement income.
Employees who generate retirement income using immediate income annuities can use the inflation protection feature to tie annuity income to the performance of the U.S. Consumer Price Index for All Urban Consumers, according to MetLife.
Annuity income payments will never go down as a result of use of the feature, but payments will rise as fast as the CPI-U benchmark rises, MetLife says.
MetLife is not putting an annual cap, a cumulative payment cap or any other limit on payment increases resulting from big increases in inflation, the company says.
MetLife says it believes its inflation protection feature is the only such feature now available in the United States that does not put a cap on payment increases.
In extended periods of high inflation, benefit payment adjustments that are limited by an annual cap can significantly lag inflation. As a result, “capped” inflation adjustments can fail to protect an annuitant’s purchasing power throughout retirement.
The MetLife units that issue the inflation protection feature will be responsible for backing the benefit guarantee.