UBS Global Asset Management and Genworth Financial have agreed to introduce a guaranteed income for life option for 401k participants that will be available with UBS's recently announced target retirement funds and other investment options.
The guaranteed income for life benefit is expected to be available by the end of the first quarter and is a result of a collaborative effort between UBS Global Asset Management and Genworth Financial.
The benefit will be designed to allay investor worries that social security and defined benefit pension plans may not be sufficient sources of future income. Unlike many other income generating vehicles, the benefit will be designed to be easy to understand, low cost, portable and allow any remaining assets to be passed on to beneficiaries.
The guaranteed income for life benefit fills a void left by the closing and freezing of defined benefit pension plans, a primary source of income for many retirees.
Subject to regulatory approval, the new benefit will allow 401k participants to withdraw 5% of their highest annual locked-in portfolio value for life, even if total withdrawals ultimately exceed the value of their portfolios. In addition, the guaranteed income a participant receives can rise if the total value of their portfolio increases during strong performing markets.