AllianceBernstein, the investment management firm whose defined contribution unit claims to be the first 401(k) provider to offer annuitized lifetime income options as a qualified default investment, has announced the formation of a fiduciary service that will assume the responsibility for vetting insurance companies when offering lifetime income options to plan participants.
Under the service, AB will serve as a 3(38) fiduciary to sponsors. In that capacity, sponsors and plan fiduciaries will be fully relieved of fiduciary obligations relative to the selection and monitoring of lifetime income options.
AB, as a 3(38), will carry full fiduciary responsibility in selecting and monitoring income options.
Sponsors will still have the fiduciary obligation to prudently select the investment manager.
In a statement, AB said the new service will give sponsors more confidence in offering lifetime income options for participants, because much of the fiduciary burden in doing so will be alleviated.
“We think it is clear that policymakers and regulators have initiatives underway to encourage plan sponsor adoption of guaranteed income solutions,” said Richard Davies, Senior Managing Director, Defined Contribution at AB, in the statement.
“With our new fiduciary service, a plan sponsor can delegate responsibility to AB for its insurance product selection. This should make plan sponsors feel more comfortable in offering employees guaranteed income in retirement,” he added.