Choosing a lifetime income guarantee

In order to fulfill your fiduciary duties, it’s important to follow a prudent process when choosing a guaranteed lifetime income investment for your retirement plan.

Follow a prudent process

The key to a prudent process for selecting the insured guarantee of retirement income is to compare the competing products in terms of their designs, features and prices. Let’s focus on the selection of an annuity with guaranteed withdrawal benefits (GWBs). GWBs are an insurance guarantee that, together with the investments in a participant’s account, provides lifetime income to the participant.

With GWBs, the participant initially withdraws money from the investments in his or her account in accordance with a structured withdrawal procedure, but if the account runs out of money—because, for example, of poor returns on the investments or because the participant has a long life—the insurance company steps in and continues the payments for the rest of the participant’s life. If the participant is married and selects the joint-and-survivor option, payments can continue for the life of the spouse, as well.

Assess financial strength and product features

It’s important to look at the financial strength of the insurance company, since the participant’s income is guaranteed well into the future. However, it’s also important to see how a GWB compares to those offered in competing guaranteed withdrawal benefit products. Fees also need to be reasonable and competitive.

Download independent firm Drinker Biddle’s white paper, Fiduciary Process in Evaluating In-plan Guarantees , to learn more about the prudent process they developed for choosing GWBs.

Adding a GWB to a custom portfolio

Some GWB providers charge for the guarantee from the moment the participant places assets in the investment portfolio associated with the guarantee. However, others, like Lincoln, design the guarantee to be incorporated into a target-date fund or portfolio approximately 10 years prior to the targeted retirement date (for example, beginning in 2018 for the 2028 target-date portfolio). While the first scenario provides the guaranteed protection over a potentially longer period, some people question whether younger employees need to incorporate the guarantee (and the associated fee) into their allocation.

The Lincoln Secured Retirement IncomeSM investment option can be included in the glide path of a custom portfolio and phased in over a specified period. For example, 1/10 of the account can be guaranteed in the first year, and only 1/10 of the fee is charged. Then, each year thereafter, the coverage steps up from 10% to 20% to 30%, and so on. The fee for the guarantee is assessed only on the portion of the account that is guaranteed. This allows a participant of any age to select a portfolio that automatically transitions a portion of the portfolio to provide a guaranteed income stream as the participant gets closer to retirement.

Help make retirement income last

Regardless of how a fiduciary decides to assess the design features, these are the types of features that fiduciaries need to understand and consider. Find out how Lincoln Secured Retirement IncomeSM solutions can provide participants with lifetime income. Call our sales desk at 855-533-2170 or read more at

Lincoln Secured Retirement IncomeSM solutions are offered as a group variable annuity. Amounts contributed to the annuity contract are invested in the LVIP Global Moderate Allocation Managed Risk Fund, a fund of funds with a balanced allocation. The guarantee is provided by a contract between the client/plan sponsor and Lincoln National Life Insurance Company that provides a plan participant with a guaranteed annual retirement income.

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.

A group variable annuity is a long-term investment product designed particularly for retirement purposes. Group annuities contain both investment and insurance components and have fees and expenses, including administrative and advisory fees. The annuity’s value fluctuates with the market value of the underlying investment option, and all assets accumulate tax-deferred. Withdrawals may carry tax consequences, including possible tax penalties.

The LVIP Global Moderate Allocation Managed Risk Fund is not guaranteed or insured by Lincoln or any other insurance company or entity, and shareholders may experience losses. The protection strategy used by this fund is separate and distinct from any annuity or insurance contract rider or features.

The target date is the approximate date when investors plan to retire or start withdrawing their money. Some target-date models make no changes in asset allocation after the target date is reached; other target-date models continue to make asset allocation changes following the target date. The principal value is not guaranteed at any time, including at the target date. An asset allocation strategy doesn’t guarantee performance or protect against investment losses.

Investors are advised to consider carefully the investment objectives, risks, and charges and expenses of the group variable annuity and its underlying investment option before investing.  The applicable variable annuity prospectus contains this and other important information about the variable annuity and its underlying investment option. Please call 888-868-2583 for a prospectus. Read it carefully before investing or sending money. Products and features are subject to state availability.

Lincoln Secured Retirement IncomeSM group variable annuity contracts (contract form AN-701 and state variations) are issued by The Lincoln National Life Insurance Company, Fort Wayne, IN, and distributed by Lincoln Financial Distributors, Inc., a broker-dealer. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so.

All contract guarantees, including those for guaranteed income or annuity payout rates, are subject to the claims-paying ability of the issuing insurance company. They are not backed by the broker-dealer or insurance agency from which this annuity is purchased or any affiliates of those entities other than the issuing company affiliates, and none makes any representations or guarantees regarding the claims-paying ability of the issuer. There is no additional tax-deferral benefit for an annuity contract purchased in an IRA or other tax-qualified plan.

Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Affiliates are separately responsible for their own financial and contractual obligations.

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.