Mutual of Omaha Rolls Out Income Option

Retirement plan advisers looking to help participants (and plan sponsors) find a retirement income solution have another option to consider.

The offeringaptly named the Lifetime Guaranteed Income Accountis from Mutual of Omaha, and it purports to guarantee that plan participants won’t outlive their retirement income.      

Underwritten by Mutual of Omaha affiliate United of Omaha Life Insurance Company, the new Lifetime Guaranteed Income Account (LGIA) is now available to plan sponsors and their plan participants nationwide as part of Mutual of Omaha’s retirement platform.  According to an announcement, the investment is designed to translate employee retirement savings into known guaranteed income for life.      

Tim Bormann, retirement plans product line director at Mutual of Omaha, noted that while participants generally know what their retirement plan balance is, most still have no concept of how much retirement income it will generate.  He says their goal in helping participants is to help that number be “known, shown, and guaranteed.”

Bormann said that the LGIA is designed to eliminate three of the most common pitfalls of retirement savings plans: the impact market volatility can have on a participant’s ability to accumulate sufficient savings (market risk), the possibility of a participant outliving their savings (longevity risk), and the impact a down market (particularly one at the time of retirement) can have on retirement income.        

Product Details

The LGIA is positioned as an investment option in the retirement plan, and a credited rate of interest is applied to the balances invested there. The interest-crediting rate applied to the account is net of all fees, and the credited interest rate will typically be 0.5% lower than the rate credited to the Guaranteed Account.

The income payable at age 65 is displayed on a participant statement as an annual amount.  The standard benefit shown is expressed as a 20-year certain and life annuity.  That means that the participant will receive those payments for the rest of their life (beginning at age 65), and that the benefit is guaranteed for the first 20 years (so if the participant were to die before receiving all of the guaranteed payments, their beneficiary will receive the remaining guaranteed payments). Participants may transfer inand outof the LGIA fund at any time, though there are some frequent trading/market timing restrictions.

Each year on the participant’s birthday, the retirement income amount is reviewed to determine whether earnings warrant an increase in that guaranteed retirement income amount. If so, the participant is notified in writing; however, Mutual of Omaha said that “benefits will never decrease based on the performance of the account.”

The LGIA provides portability by offering multiple payout options for participants and their spouses, according to the company. Additionally, the design allows plan sponsors to direct their matching contributions to the Lifetime Guaranteed Income Account regardless of where their participants choose to invest, “essentially providing a pension-like benefit to employees without assuming the risks, obligations and expenses normally associated with defined benefit plans,” according to Bormann.

"With the recent market volatility, we’ve entered a new reality where employers and their employees are looking for guaranteed retirement security,” said Scott Herchenbach, senior vice president of retirement plans at Mutual of Omaha. “For years, the retirement industry has focused on telling plan participants how much they’ve accumulated for retirement without translating that dollar figure into a known retirement income. Our new Lifetime Guaranteed Income Account is designed to do just that. Not only will we help participants understand exactly what their contributions mean in terms of retirement incomewe’ll guarantee that income for life, giving employers and their employees peace of mind.”

More information is available at