Top 5 stable value questions from participants

The answers to these frequently asked questions may help participants better understand stable value investments.

What are the objectives of a stable value investment?

A stable value investment is a relatively low-risk investment that is only available to retirement plan participants. It typically has an investment objective of capital preservation, liquidity, and yield. Current interest rates on stable value investments are provided by the issuing insurance company. Based on the type of stable investment offered, the interest rate can be set for a specific period, such as six months. Some stable value investments also offer a guaranteed minimum interest rate (GMIR) that guarantees the issuing company will pay a specific interest rate, no matter what the current interest rate environment.

What role can stable value play in a participant’s savings and investment strategy?

Stable value investments can play different roles in savings and investment strategies. They are often most appropriate for retirement plan participants who are seeking current income and capital preservation, have a short- to intermediate-term investment time horizon, are looking for alternatives to similar types of investments such as a money market fund or are looking to balance more aggressive investment options in their portfolios.

What risks should a participant be aware of when investing in stable value?

All investments have some risks, and retirement plan participants should always carefully consider risks before investing. The specific risks of stable value investments depend on the type of stable value investment vehicle offered in the plan. For example, investors should consider risks associated with the investment objective, underlying securities, contract provisions and guarantees, issuing insurance company, and fees of a stable value investment.

Why do stable value options include transfer and withdrawal restrictions?

Insurance companies provide guarantees and other beneficial features as part of a stable value investment vehicle. Unexpected transfers or withdrawals may disrupt the underlying investments, and, therefore, certain limits are put in place. These provide ongoing stability and equity to new and remaining participants, in addition to maintaining the long-term guarantees and other beneficial features.

What are the fees?

Fees for stable value investments can vary, based on the type of stable value investment offered in the retirement plan. Some stable value investments express the fee as an expense ratio; others don’t state an expense ratio, and the interest rate the participant receives is net of fees.

Lincoln Financial Group® affiliates, their distributors, and their respective employees, representatives, and/or insurance agents do not provide tax, accounting, or legal advice. Please consult your own independent advisor as to any tax, accounting, or legal statements made herein.

The Lincoln Stable Value Account is a group fixed annuity issued by The Lincoln National Life Insurance Company, Fort Wayne, IN. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so. 

For contracts issued in New York, the Lincoln Stable Value Account is a fixed annuity issued by Lincoln Life & Annuity Company of New York, Syracuse, NY. 

This material is provided by The Lincoln National Life Insurance Company, Fort Wayne, IN, and, in New York, Lincoln Life & Annuity Company of New York, Syracuse, NY, and their applicable affiliates (collectively referred to as “Lincoln”). This material is intended for general use with the public. Lincoln does not provide investment advice, and this material is not intended to provide investment advice. Lincoln has financial interests that are served by the sale of Lincoln programs, products and services.