BlackRock activates retirement solution offering a paycheck for life
BlackRock announced that its retirement income solution, LifePath Paycheck, is now available in defined contribution plans.
The LifePath Paycheck solution takes a new approach to retirement income by providing access to guaranteed income through a target date fund, an investment strategy that automatically adjusts to a targeted retirement year. Plan participants will have the option to access the guaranteed income as early as age 59 ½ by purchasing annuity contracts issued by Equitable and Brighthouse Financial.
In the calendar year of an individual turning 55, LifePath Paycheck begins allocating a portion of the investment portfolio to a new asset class called lifetime income, which gives an individual the option to use ~30% of their balance in the portfolio for purchasing a lifetime income stream (annuities) from insurers selected by BlackRock.
Avangrid, Adventist HealthCare Retirement Plans, and Tennessee Valley Authority Retirement System will be among the first to implement the strategy as the default investment option for their employees’ defined contribution plan, with additional plan sponsors to follow in the coming months. To date, 14 plan sponsors, with plans totaling $27 billion in target date assets, are planning to make LifePath Paycheck available to 500k employees, with several other large plan sponsors expressing interest.
BlackRock has worked closely with recordkeepers to facilitate the implementation of LifePath Paycheck for their clients. Fidelity Investments and Bank of America are among the first to enable access to the solution on their record keeping platforms. Other recordkeepers, including Voya Financial, are also planning to make it available.
In addition, BlackRock worked closely with insurers Equitable and Brighthouse Financial on providing the LifePath Paycheck solution’s income stream option.
“We believe LifePath Paycheck will one day be the default retirement investment strategy, providing access to a predictable, paycheck-like income stream that can help improve the quality of life for millions of Americans in retirement.” – Larry Fink, Chairman and CEO of BlackRock.
“A top concern among American workers is the fear of running out of money during retirement. And yet the industry has focused on helping people understand they need to save – but not how to manage spending in retirement, even as companies have shifted from defined benefit to defined contribution plans. With this solution, we’re rethinking retirement. And part of that was working across the industry to build something new.” – Anne Ackerley, Head of Retirement at BlackRock.
“Equitable’s mission is to help our clients secure their financial well-being so they can pursue long and fulfilling lives. The addition of secure income through defined contribution plans presents a profound opportunity to expand on the delivery of our mission. We feel privileged to support BlackRock in its LifePath Paycheck solution as it helps the record number of Americans reaching traditional retirement age reduce the risk of outliving their savings.” – Aaron Sarfatti, Chief Strategy Officer and Head of Institutional Businesses and New Ventures at Equitable.
“Brighthouse Financial is excited to play a role in helping U.S. workers who are seeking ways to access lifetime retirement income. The launch of LifePath Paycheck is an important step toward addressing the retirement challenges that America faces, and we are pleased to work with BlackRock on this solution.” – Eric Steigerwalt, President and CEO, Brighthouse Financial.
