Fidelity Investments, which has $11.1 trillion in assets under administration, announced Thursday that it was launching Guaranteed Income Direct in 2022, giving 401(k) and 403(b) plan participants the ability to annuitize their retirement savings.
The company says it has 8 million workers age 50 to 64 on its savings platform, noting that the growing interest in these "guaranteed income" products was a key reason for offering this new option.
Workers in the Fidelity network will be able to buy an immediate income annuity, with institutional pricing and offered by an insurer of their choice, via Fidelity's platform. Participants can select the product and the amount they want to convert on an individual basis. Any money not converted can remain in the workplace savings plan, the company said.
The annuity selections are subject to the claims paying ability of the issuing insurance company.
"Shifting from saving for retirement to living in retirement is one of the biggest transitions a person will make in their lifetime, and one of the top challenges facing individuals during this transition is how to ensure that they have enough predictable income to cover their essential expenses," Keri Dogan, senior vice president, retirement solutions at Fidelity, said in a statement.
"Our new Guaranteed Income Direct product provides employees with a simplified option to use their retirement savings plan assets to create their own personal pension and provide them with a steady, reliable stream of income to help cover their expenses in retirement," Dogan added.
Nearly 80% of workers are interested in putting some of their retirement savings into an investment option that would guarantee them monthly income when they retire and help ensure they don't outlive their savings, Fidelity said in the statement, citing the Employee Benefit Research Institute's 2021 Retirement Confidence Survey.
