UBS said the new offering will be available with the company’s recently announced target retirement funds and other investment options by the end of the first quarter.
According to a company announcement, the guaranteed income for life benefit will allow 401(k) participants to withdraw 5% of their highest annual locked-in portfolio value for life, even if total withdrawals ultimately exceed the value of their portfolios. In addition, the guaranteed income a participant receives can rise if the total value of their portfolio increases during strong performing markets.
The benefit will be available for enrollment at age 50. Automatic withdrawals of 5% of the highest locked-in account value can begin at age 65. In the event a participant dies, any remaining assets pass on to their beneficiaries.
The lifetime income guarantee will be portable and preserved via an IRA rollover.
“We will now be able to provide the income security of a defined benefit plan to employees in a 401(k) plan,” said Drew Carrington, Head of the Defined Contribution and Retirement Solutions Group at UBS Global Asset Management, in the announcement. “This guaranteed income for life option is the final piece of the puzzle—we are now able to help plan sponsors provide employees assurance that they will not outlive the income they receive through retirement.”