TIAA Adds $2.3B to 2022 Fixed Annuity Interest Payments

By Allison Bell

News March 09, 2022 at 03:24 PM

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TIAA said today that it will add $2.3 billion to the total amount of interest payments flowing to holders of the TIAA Traditional fixed annuity this year.

The New York-based life insurer had already promised to pay holders of the annuity $5 billion in interest.

The new announcement brings the total expected payout to about $73 billion, and it will increase the rates typical retirement savers get by an average of 21%, TIAA said.

The TIAA Traditional annuity offers a guaranteed minimum crediting rate along with the opportunity to get an additional amount over the guaranteed rate.

The TIAA board has discretion over how much, if any, it will add to the guaranteed amount in a given year.

Earlier, the company said it would increase lifetime income payments by 5% for TIAA Traditional fixed annuity holders who had begun receiving annuity benefits payments.

TIAA's announcement supports the belief that interest rate increases are coming, in spite of the possibility that the war in Ukraine could push the world's central bankers to try to hold down interest rates, in an effort to help home buyers, homeowners, speculators who have bought stock using borrowed money, and other individuals and entities that suffer when interest rates rise.

Bill Griesser, a TIAA executive, said in a comment, included in the increase announcement, that one advantage of buying a fixed annuity is access to stable returns, and reduced worry about the kind of stomach-turning volatility that has filled the headlines in recent weeks.

Having an annuity with guarantees "is like getting a 'paycheck' for life when you stop working," Griesser said.

(Photo: AP)

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