BlackRock has attracted six employer plans with $16 billion in assets under management for a new program that can add an annuity spigot to a 401(k) plan account.
The New York-based asset manager said the list of employers now using the LifePath Paycheck program includes Avangrid, Adventist HealthCare Retirement Plans, the Tennessee Valley Retirement System and BlackRock's own retirement plan.
The program gives 401(k) plan participants a way to use their account assets to buy annuities. Equitable and Brighthouse will provide the annuities.
BlackRock launched the program in April 2024. Since then, executives have commented occasionally on the program but have emphasized that asset flow might be uneven.
The new announcement appears to be a sign that BlackRock still likes the program.
What it means: Some skeptics have questioned how likely the new-generation in-plan annuity programs are to sell better than other in-plan annuity programs that have been around for years.
If the new in-plan annuity programs take off, they could increase the percentage of retirement planning clients who have access to some kind of guaranteed income.
In some cases, the programs could lead to new types of planning problems if clients come in with a significant portion of assets locked into in-plan annuities that were purchased before the clients sought personalized advice.
The backdrop: Companies have developed the new-generation in-plan annuity programs partly in response to provisions included in the Setting Every Community Up for Retirement Enhancement Act and the Secure 2.0 Act.
Program promoters say it can simplify retirement planning by providing a simple, reasonably priced way to get a stream of lifetime income out of the 401(k) plan account.
In addition to BlackRock, the list of companies setting up new-generation in-plan annuity programs includes companies like JPMorgan and TIAA.
BlackRock's program: BlackRock reported that Fidelity and Bank of America are supporting access to the program through their recordkeeping programs.
Voya will add recordkeeping support soon, BlackRock said.
Larry Fink, CEO, said Wednesday during a conference call with securities analysts that the LifePath target-date program as a whole has about $500 billion in assets under management.
The LifePath Paycheck program is part of the target-date fund program.
The program "is the fastest-growing lifetime income target date strategy in the defined contribution market," Fink said.
BlackRock adopted the program as part of its own retirement savings plan because it believes programs like that will become the default defined contribution strategy for the entire retirement plan industry, Fink said.
Martin Small, BlackRock's chief financial officer, said the target-date fund program could find a way to invest in private equity, private debt and other alternative assets.
"We think the same innovations that powered LifePath Paycheck could ultimately power a target-date structure with private markets and alternatives as part of the glide path," Small said.
Larry Fink, CEO of Blackrock. Credit: Bloomberg
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