The account can move plans closer to a Liability Driven Investment (LDI) model and allows sponsors to structure a portion of their assets to mirror liability cash flows as outlined by the funding model created by the Pension Protection Act (PPA). The GPA addresses “near-term” (0–5 years) liabilities, defined by the PPA according to duration and the corporate bond yield curve, by providing an investment option that offers a guarantee of principle coupled with competitive yields.
The GPA is a group annuity contract distributed by New York Life Insurance Company. The account features a declared interest crediting rate that resets every six months.“The PPA changed the investment dialogue for pension plans,” said Steven Dorval, CFA, managing director and head of retirement investments at New York Life Investments. “Sponsors and advisers are focused on funding their liabilities. We are working with clients to help meet their liability needs within the three distinct liability segments defined by the PPA, as they consider a range of options, including moving toward a liability driven investment (LDI) model.”