What You Need to Know
- Annuities are being added as an option in the firm's target date retirement offerings in 401(k) plans.
- The new LifePath Paycheck product embeds annuity contracts issued by Equitable and Brighthouse Financial.
- Once plan participants turn 59-1/2 they can also purchase their own fixed annuity to provide income for life.
BlackRock, the world’s biggest asset manager with more than $9 trillion in assets, is moving into annuities.
The firm has a new target date retirement product for 401(k) plans that will provide workers a stream of payments through their lives. Called the LifePath Paycheck solution, it embeds annuity contracts issued by Equitable and Brighthouse Financial, according to BlackRock.
Once participants reach age 59-½, they will have the option to purchase a fixed individual retirement annuity to provide a guaranteed stream of income for life. Participants will be able to use 30% of their 401(k) balance for in the product, according a report in The Wall Street Journal.
Five employers have already signed up for the new product, including the Tennessee Valley Authority, which has about $7.5 billion in target date investments in its retirement plans.
BlackRock expects that over 120,000 U.S.-based 401(k) plan participants will be able to access the annuity option starting in 2022, when initial plan adoptions are anticipated.