T. ROWE PRICE LAUNCHES LIFETIME INCOME SOLUTION FOR RETIREES WITH PACIFIC LIFE
Rhea-AI Summary
T. Rowe Price has launched Managed Lifetime Income (MLI), a new retirement solution for defined contribution plans. MLI combines a managed payout investment from T. Rowe Price with a Qualifying Longevity Annuity Contract (QLAC) from Pacific Life to provide retirees with stable and predictable monthly income for life.
The solution offers payments from the managed payout investment for the first 15 years of retirement, followed by guaranteed QLAC payments for the participant's lifetime. MLI is integrated within T. Rowe Price's participant experience, including access to a retirement income estimator. This launch expands T. Rowe Price's retirement income solutions, giving clients the ability to choose between products with or without guaranteed income.
Positive
- Launch of Managed Lifetime Income (MLI) solution for retirees
- Partnership with Pacific Life to offer guaranteed lifetime income
- Integration of MLI within T. Rowe Price's participant experience
- T. Rowe Price accepts fiduciary responsibility for QLAC provider selection and monitoring
- 52% of plan participants aged 60 and older stay in-plan for at least four years after separating from service
Negative
- None.
Insights
The launch of Managed Lifetime Income (MLI) by T. Rowe Price represents a significant strategic move in the competitive retirement solutions market. This product addresses a important need for retirees: guaranteed lifetime income. By combining T. Rowe Price's managed payout investment with Pacific Life's QLAC, the offering provides a unique value proposition that could attract and retain assets under management.
The potential impact on T. Rowe Price's business is substantial:
- Increased asset retention: With 52% of participants aged 60+ staying in-plan for at least four years post-retirement, MLI could further improve this retention rate.
- Revenue diversification: The partnership with Pacific Life allows T. Rowe Price to tap into the annuity market without taking on insurance risk.
- Competitive advantage: The integrated solution differentiates T. Rowe Price in the crowded retirement services market.
For investors, this move signals T. Rowe Price's commitment to innovation and adapting to changing retirement needs, which could positively impact long-term growth prospects and market share in the lucrative retirement services sector.
The introduction of Managed Lifetime Income (MLI) is a game-changer in the retirement planning landscape. It addresses two critical challenges retirees face: longevity risk and market volatility. The hybrid approach of combining managed payouts with a QLAC is particularly innovative:
- The 15-year managed payout phase allows for potential market growth and flexibility.
- The subsequent QLAC payments provide a guaranteed income floor for life, mitigating longevity risk.
This structure optimizes the balance between growth potential and income security. The integration with T. Rowe Price's participant experience, including the retirement income estimator, enhances user engagement and personalization. Moreover, T. Rowe Price's acceptance of fiduciary responsibility for QLAC provider selection adds an extra layer of security for plan participants. This comprehensive approach could set a new standard in the industry, potentially influencing regulatory frameworks and competitor offerings in the defined contribution space.
Managed Lifetime Income provides predictable, guaranteed retirement income for life
T. Rowe Price has a strong background in managed payout products with the introduction of Retirement Income 2020 in 2017, followed by Retirement Income 2025. MLI is rooted in the research, insights, and methodology that underpin the firm's target date solutions, and expands on the managed payout investment portion by adding a guaranteed component. Together, these retirement income solutions give T. Rowe Price clients the ability to choose the product that best fits their needs: a solution with guaranteed income or one without it.
"T. Rowe Price recognizes the diverse retirement income needs of plan participants and is committed to offering a wide range of solutions to empower them with choice and flexibility," said Francisco Negrón, head of Retirement Plan Services at T. Rowe Price. "We understand that a common concern among retirees is whether they will have sufficient income for their remaining years. The introduction of MLI underscores our dedication to ensuring retirees can feel financially secure about their future."
MLI is integrated within T. Rowe Price's participant experience, which includes access to a retirement income estimator for the ability to tailor retirement savings into the managed payout investment and QLAC, optimizing monthly income. Participants who choose MLI will receive payments from the managed payout investment for the first 15 years of retirement, and then guaranteed QLAC payments from the insurer will continue for the participant's lifetime. T. Rowe Price accepts the fiduciary responsibility for the selection and monitoring of the QLAC provider.
"Our collaboration with T. Rowe Price on MLI underscores our commitment to providing retirees with financial security," said Michael Oler, head of Defined Contribution Lifetime Income at Pacific Life. "MLI represents an innovative advancement in retirement planning. By pairing MLI's robust approach to asset management with the security of a QLAC, we are creating a simple yet dynamic approach to helping participants retire more confidently. This holistic design is raising the bar for lifetime income solutions."
T. Rowe Price's latest 401(k) client data shows a growing trend of plan participants maintaining their assets in-plan after retirement, with
Negrón from T. Rowe Price adds, "Our goal is to consistently stay at the forefront of our clients' needs. We aim to simplify the transition into retirement and to offer solutions that can give retirees the financial confidence and peace-of-mind in this new phase of life."
T. Rowe Price and Pacific Life are not affiliated.
ABOUT T. ROWE PRICE
Founded in 1937, T. Rowe Price (NASDAQ – GS: TROW) helps individuals and institutions around the world achieve their long-term investment goals. As a large global asset management company known for investment excellence, retirement leadership, and independent proprietary research, the firm is built on a culture of integrity that puts client interests first. Clients rely on the award-winning firm for its retirement expertise and active management of equity, fixed income, alternatives, and multi-asset investment capabilities. T. Rowe Price serves millions of clients globally and manages US
ABOUT PACIFIC LIFE
Pacific Life provides a variety of products and services designed to help individuals and businesses in the retail, institutional, workforce benefits, and reinsurance markets achieve financial security. Whether your goal is to protect loved ones or grow your assets for retirement, Pacific Life offers innovative life insurance and annuity solutions, as well as mutual funds, that provide value and financial security for current and future generations. Supporting our policyholders for nearly 160 years, Pacific Life is a Fortune 500 company headquartered in
Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products can be issued in all states, except
All guarantees are subject to the claims-paying ability and financial strength of the issuing insurance company.
Pacific Life is a product provider. It is not a fiduciary and therefore does not give advice or make recommendations regarding insurance or investment products.
View original content:https://www.prnewswire.com/news-releases/t-rowe-price-launches-lifetime-income-solution-for-retirees-with-pacific-life-302276355.html
SOURCE T. Rowe Price Group
FAQ
What is T. Rowe Price's new Managed Lifetime Income (MLI) solution for retirees?
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