Hancock Puts Out 401(k) Guaranteed Income Rider

John Hancock Retirement Plan Services has launched its Guaranteed Income for Life (GIFL), an optional 401(k) rider featuring a principal guarantee.

A John Hancock news release said the GIFL product offers participants upside potential, downside protection, and a lifetime income source.

GIFL allows participants to invest their 401(k) funds in John Hancock Lifestyle Funds to create a benefit base. The guaranteed benefit base is used to calculate a 5% lifetime income amount at the time of distribution. Once distributions begin, participants can receive this amount for the rest of their lives, Hancock said.

On the participant’s yearly anniversary date, if the market value of the funds with the guarantee option is higher than the benefit base, the benefit base is automatically increased to equal the market value, locking in market gains to the benefit base, the announcement said.

Hancock said the product carries a 35 bps cost and can be supplied with Spanish and English enrollment materials. Participants who add the rider pay a fee of 0.35% annually based on their balance they have in the funds with the guarantee. If a participant wishes to extend the guarantee to cover the lives of themselves and their spouse, a spousal option is also available.

“As individuals rely more heavily on 401(k) plans for their retirement funding, plan sponsors are looking for options that offer their employees more certainty,’ says Ed Eng, Senior Vice President, John Hancock RPS, in the announcement. “We believe that adding Guaranteed Income for Life to their plans is the right solution because it helps minimize some of the common risks encountered in retirement, like retiring in a down market or outliving retirement savings’.

Hancock said the guaranteed income portion can be portable if the participant retires, changes jobs or leaves the plan allowing the employee to roll over the money to a Hancock investment vehicle with similar fund options that also includes the guarantee.

If the plan sponsor changes providers and a participant is not eligible to roll the funds over, the participant receives the market value of the account and John Hancock will refund the GIFL fees they paid, for a maximum of three years, the company said.