BlackRock Inc. has picked life insurance units of Equitable Holdings and Brighthouse Financial Inc. to help it provide an annuity-based lifetime income program for U.S. retirement plan sponsors.
The new LifePath Paycheck program will combine a 401(k) plan or other defined contribution plan with a target date investment arrangement — a fund designed to tilt toward lower-risk assets as the user nears retirement age.
The annuity contracts “will not limit the daily liquidity of the target date strategy and will provide plan participants with the option to use a portion of their plan account balance at retirement to purchase fixed individual retirement annuities from the insurers that will provide guaranteed lifetime income,” BlackRock said Wednesday.
The participants can buy the annuities from Equitable Holdings’ AXA Equitable Life Insurance Company or a Brighthouse life insurance company subsidiary, according to BlackRock.
AXA Equitable is the entity in its corporate family that goes by the name Equitable.
The Brighthouse subsidiaries involved in the BlackRock arrangement will be Brighthouse Life Insurance Company of Charlotte, North Carolina, in most of the country and Brighthouse Life Insurance Company of New York in New York state.
Equitable and Brighthouse said the annuities they supply will provide guaranteed lifetime income.
Brighthouse said in its announcement that it expects to need regulatory approval for the annuities used in the BlackRock program.
Voya will be one of the retirement plan recordkeepers working with BlackRock as BlackRock brings the LifePath Paycheck program to market, according to Jeff Cimini, a Voya executive quoted in the BlackRock program announcement.
BlackRock will put the participant education tools and account management tools for the new program on the Microsoft Azure system. The MyLifePath “integrated digital experience” system will provide potential retirement income projections, based on factors such as the participant’s life expectancy and BlackRock’s market forecasts, according to BlackRock.
The system “will also facilitate participants’ engagement with the insurers if they elect to purchase the fixed individual retirement annuities,” according to BlackRock.
An employer with a retirement plan can connect the MyLifePath system with the plan’s recordkeeping system, according to BlackRock.
BlackRock has using the LifePath name for funds for years, and it registered the name “LifePath Income” in 2010. U.S. Patent and Trademark Office filings show that BlackRock’s BlackRock Institutional Trust Company N.A. filed a trademark application for “LifePath Paycheck” in November 2018.
— Read Employer Interest in Annuitization Options Holds Steady: Transamerica Center, on ThinkAdvisor.