AllianceBernstein today announced it has increased plan sponsors’ access to the firm’s retirement-income-generating investment—the AB Secure Income Portfolio—by removing restrictions on its use to only AB’s customized plan sponsor retirement plan designs. The expansion of distribution is due to growing sponsor demand.
For plan sponsors, separating the Secure Income Portfolio from the glide path and target-date funds offers retirement plans an investment option that participants can use to generate guaranteed retirement income without changing the plan’s target-date fund provider. The Secure Income Portfolio may be used as part of a qualified default investment alternative, explains Jennifer DeLong, the head of defined contribution at AB.
“We’re making available the Secure Income Portfolio as a ‘standalone option,’ that can be utilized with [the sponsor’s] existing target-date fund, it can be utilized as an allocation in a managed account and it could also be used as a core menu option,” says DeLong.
For minimum initial investments in the AB Secure Income Portfolio AB institutional separate account requires sponsors to commit $100 million in assets to use it on the plan’s core menu or as an allocation in a managed account; or $250 million in target-date fund assets to use it alongside the plan’s existing target-date funds as part of the plan’s default, explains DeLong.
For defined contribution plans, AB launched the Lifetime Income Strategy, in 2012. The Secure Income Portfolio has been a component of the strategy for more than a decade, AB said in a press release.
“The lifetime income strategy is the holistic solution that includes the target-date [fund], so that’s $11 billion in total assets as of the end of Q1 2024,” says DeLong. “Within that lifetime income strategy within the target date, the secure income portfolio is that insurance vehicle, that’s about $4 billion. The whole thing is the lifetime income strategy—Secure Income Portfolio is the piece that we’re now offering separately from our glide path services.”
AB’s lifetime income strategy invests in a flexible guaranteed-income portfolio backed by multiple insurers. Guaranteed income is provided by insurers selected through a competitive bidding process based on factors, including financial strength, AB said in a press release.
Currently, five “large,” plan sponsor clients use the lifetime income strategy, says DeLong.
“It’s a professionally managed investment option that provides guaranteed income for life at retirement, while also maintaining liquidity and growth potential,” explains DeLong. “The underlying investment is a balanced index fund, that’s 50% equities, 50% fixed income.”
AB’s Secure Income Portfolio invests in a variable annuity with a guaranteed lifetime withdrawal benefit rider, adds DeLong.
Plan sponsors are spending their time and energy learning about lifetime income options to add to their plans, searching for ways to implement flexible options, says DeLong.
“We have the secure income portfolio; it’s been up and running; we can offer it separately; from our glide path and our target date solutions,” she says.
RTX Corp. was among AB’s first committed plan sponsor clients when it launched the strategy in 2012, says DeLong. RTX Corp. worked with AB to design its lifetime income strategy.
Sponsors are “interested in offering guaranteed income to their [participants], but they prefer to keep their existing target-date provider or they might be using target-date [funds] as their default option; they may also offer managed accounts as opt-in, but they’re interested in allowing participants to have access to guaranteed income,” says DeLong.