The SIO offers plan participants the growth potential of the equity markets tied to the S&P 500 Price Return Index up to a cap, with some downside protection against market losses. AXA Equitable says it is the first company in the industry to offer this type of investment option in a variable annuity product used to fund 403(b) and 457(b) retirement savings plans.
According to a press release, plan participants can invest in one or more investment segments with the SIO. Each segment provides a rate of return tied to the performance of the S&P 500 Price Return Index (Index). If the Index goes up over the course of a segment’s investment period, a participant’s value in that segment will earn the same rate of return as the Index, up to a specified maximum rate of return called the Performance Cap Rate.
The Performance Cap Rate is the maximum rate of return for the segment once it is established. AXA Equitable sets the Performance Cap Rate on the segment start date. If the Index goes down during a segment’s investment period, a segment buffer absorbs the first 10% of participant losses for a segment held till maturity. The buffer eliminates for the participant the negative impact of market volatility up to the first 10% of loss in Index value.
The announcement said one key benefit of the SIO is flexibility. Participants can invest in segments through payroll contributions; transfers of amounts they have in other EQUI-VEST investment options; and rollovers and direct transfer contributions to their EQUI-VEST accounts. Participants can also choose to allocate 100% of their account value to the SIO.
More about AXA Equitable is at http://www.axa-equitable.com.