Allianz Life Launches Income Annuity for Use in DC Plans

Allianz finds growing numbers of U.S. workers want guaranteed income options in their employer-sponsored retirement plan.

Allianz Life Insurance North America launched the Lifetime Income+ Annuity, an in-plan guaranteed lifetime income option for defined contribution plans.   

The Allianz Life fixed index annuity is now available to any plan sponsor connected to the iJoin/IPX Retirement network of recordkeepers, a spokesperson said in an email.   

“We designed this product to be personalized, flexible, and portable for users,” said the spokesperson.

The Allianz annuity is funded by contributions through the participant’s defined contribution plan account, according to an Allianz consumer brochure. Annuity owners would use the annuity to build Lifetime Income Value – the assets amount Allianz uses to determine their lifetime income withdrawals.

Many participants have two common sources of retirement income, between their defined contribution plan and Social Security. The fixed index annuity does not invest directly in any stock or bond.

The annuity will earn interest based on changes in an index, such as the S&P 500, according to Allianz.

Participant annuity owners’ assets are allocated to one or more indexes, and Allianz uses a crediting method to track the performance of the indexes. On each contract anniversary, any index interest owed to the annuity owner is calculated.

If the result is positive, the annuity owner will receive indexed interest, based on the crediting method; if the result is negative, nothing happens. And although the owner won’t receive indexed interest, the value of the annuity won’t decline, either.

Allianz also offers a fixed interest allocation, using a rate they establish at the beginning of each contract anniversary.  

When annuity owners are ready to retire and start drawing income – participants must be age 60 or older – Lifetime Income+ will use the Lifetime Income Value built by the participant through contributions. Allianz Life research shows growing numbers of U.S. workers want guaranteed income products in their employer-sponsored plans. The data shows 80% of respondents have interest in an annuity for a supplemental source of guaranteed income after Social Security, 60% would add an annuity to their employer-sponsored plan if one was available, and 74% say an option allowing them to build lifetime income protection would increase their loyalty to an employer.

Allianz also finds 59% of workers are worried their money saved for retirement, in an employer-sponsored plan, will run out during retirement.

Recordkeepers and retirement plan advisers can offer the Allianz Lifetime Income+ Annuity with the Allianz Lifetime Income Benefit as a protected accumulation and decumulation option in 401(k)s and other defined contribution plans.

“We designed this new guaranteed lifetime income product to work for real people and the reality of retirement today,” said Matt Gray, head of employer markets, at Allianz Life in a statement. “The Allianz Lifetime Income+ Annuity marks a new way to design in-plan annuities with a flexible product design, streamlined connections with plan partners and increasing income potential.”

Allianz offers guaranteed lifetime income through the firm’s Lifetime Income Benefit.

Allianz aimed the annuity to help participants stretch their income and make savings last through retirement. 

The launched annuity is “tailored for defined contribution plans,” to offer plan sponsors and participants “innovative design features including growth potential and protection from market loss,”  the press release said.