GEs IVA Solves For End Game Need
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GE Financial, Richmond, Va., is marketing an income annuity that was structured from the buyers point of view–and, in particular, the viewpoint of Matthew Sharpe.
The senior vice president of GEs retirement services group, Sharpe says his retirement planning needs became the spark he needed to push for the new annuity. Now, GE is betting other people in Sharpes situation will appreciate the result.
The "result," in this case, is the GE Retirement Answer, a deferred variable annuity that automatically converts to a lifetime income VA. The lifetime IVA guarantees a minimum monthly income but also offers the opportunity for higher payouts, if the subaccount performance is strong.
Owners must meet certain conditions to get the income floor with upside potential, Sharpe notes. If they dont, the income benefit will fluctuate, as do more traditional IVA payouts.
But if they do, they know the guaranteed minimum income payments shown at policy issue will be there no matter what the market does. Their payments may go up, he says, but they cant drop below the guaranteed minimum.
Thats important, he says, because GE research shows most consumers dont know the total amount of money they will need in retirement, but they do know how much monthly income they will probably need. So thats where their planning starts.
The new VA "solves for the defined benefit part of their problem," he says, "and it offers upside potential, too."
It also solves for a problem Sharpe himself has been confronting. This has to do with retirement planning in an environment that favors multi-employer career paths.
As he puts it, "Ive only been at GE three years, so Im not yet vested in GEs defined benefit pension plan." And, due to current employment trends, he says, no one today knows whether they will be at a company long enough to be vested. Thats a problem, he adds, because he would like to have a defined benefit plan, too.
As leader of the GE team developing the new VA, he says he put that frustration to work. "My wish was to be able to buy the GE plan on my own," he recalls. "I wanted the guarantees and any excess returns generated by GE for the plans."
When the team looked at research, he continues, it found many consumers feel the same way. That prompted the team to design the GE Retirement Answer along those lines.
Heres how it works: Underwritten by GE Life & Annuity, the policy lets consumers select an "income date." This date must be at least 10 years away from time of policy inception, and it cant be changed after issue.
