Products March 1, 2011

Collaborative Effort on Retirement Income Solution

MetLife, Inc. and PIMCO have created a retirement income solution that combines investment and insurance products.
Reported by

The two companies will work together to educate advisers about the product. The solution allows a client to purchase PIMCO mutual funds designed to provide systematic real (inflation-adjusted) monthly distributions to help protect against inflation risk, and separately purchase MetLife longevity insurance to provide monthly lifetime income after mutual fund distributions end.  

“Inflation is a significant risk for retirees, and the PIMCO Real Income Funds are specifically designed to provide systematic monthly distributions for a specified term, while seeking to preserve retirees’ purchasing power,” said Tom Streiff, Executive Vice President, PIMCO Retirement Product Manager. “Should they reach the end of these distributions, clients still need a retirement income stream that lasts for their rest of their lives.”   

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PIMCO inflation-adjusted mutual funds seek to continually maintain purchasing power during the applicable and defined distribution period, the company said. The fund distributions are made monthly until all assets have been distributed, either by October 2019 or October 2029, and depending on the fund selected by the client.   

The MetLife LIG can then generate income later in life, at a time when all assets from the PIMCO funds have been distributed. Clients can begin to take income from an LIG contract after a minimum two-year waiting period, starting any time between ages 50 to 85.
Data & Research March 1, 2011

Tailored Advice Leads to Better Decision-Making

The Center for Retirement Research at Boston College found that customized advice for pre-retirees can help them take smarter actions.
Reported by

The Center for Retirement Research (CRR) measured initial reactions to the financial crisis in 2009, and then gave respondents customized advice on how to offset their losses. According to a CRR brief, after receiving advice on the tradeoff between working longer, saving more, and decreased retirement consumption, more than 40% decided to save more and/or work longer.   

About 25% reduced their planned increase in working years, which CRR found to be an appropriate response because these respondents were overestimating the number of additional work years needed to counteract their financial losses.  

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One third did not respond to the advice. The brief said further investigation shows that these “committed non-responders” are older and more likely to have been on track before the downturn. “Perhaps these individuals already have their plans in place, are close to retirement, and feel that they’ve made good prior decisions in preparing for retirement, so they are not swayed by additional advice,” the report noted.  

The brief is here.

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