Products & Services January 25, 2024

Product & Service Launches – 1/25/24

Prudential announces Fidelity-related SimplyIncome annuity solution; Betterment launches small business student loan 401(k) matching program; Corebridge brings multi-year guaranteed annuity to RIAs.

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Prudential Announces SimplyIncome for Workplace Plans

Prudential Financial Inc. noted the launch of SimplyIncomeSM, a single-premium immediate annuity, or SPIA, for employer-based retirement programs being administered by Fidelity Investments. The announcement came after Fidelity went live nationally with a 401(k)-to-annuity employee benefits offering.

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Prudential is one of a number of insurers on Fidelity’s Guaranteed Income Direct platform, with its offering going to more than 100,000 plan participants, according to Prudential.

Ann Nanda, head of Future Growth Initiatives and Distribution Enablement at Prudential Retirement Strategies, notes that the collaboration with Fidelity helps expand access to retirement security for more consumers and aligns with a key Prudential business priority to deliver retirement income in brand-new ways.

“Prudential SimplyIncome is an example of how we are co-creating innovative solutions for employer-based retirement plans, in this case working with a top plan administrator to bring a protected income option to plan sponsors and participants within a system they already know.” Ann Nanda, head of future growth initiatives and distribution enablement at Prudential retirement strategies, said in a statement.

Prudential makes more than $12 billion in protected income payments to customers every year.

Betterment at Work Launches Small Business Student Loan 401(k) Matching

Financial benefits provider Betterment at Work has launched a platform for small businesses to provide employees with a student loan 401(k) company match if they’re using Betterment’s 401(k) services.

The benefits offering allows qualified student loan repayments to count as elective deferrals that are eligible for a company match from a small employer. Employees with access to Betterment’s 401(k) can record their loan payments within the platform, according to the firm. Employers can choose to make the match annually, even if education debt payments are made on a per-payroll basis.

“We know that student debt can be a major impediment to saving for retirement,” Sarah Levy, CEO of Betterment, said in a statement. “Our industry-first student loan 401(k) matching solution is a compelling addition to our modern 401(k) that will help to broaden plan participation to those whose student debt previously kept them from saving for retirement.”

Corebridge Financial Brings Multi-Year Guaranteed Annuity to RIAs

Corebridge Financial has added a multi-year guaranteed annuity with the goal of growth and principal protection to its offerings for registered investment advisers.

The annuity allows consumers to lock in the investments for three, five or seven years, but also allows purchasers to maintain or modify their term at renewal without having to fill out a new application or purchase a new contract. The product has no withdrawal charges and gives consumers access to their money to make it easier for RIAs to manage assets should client needs change.

“American Pathway Advisory MYGA makes it simple and efficient for RIAs to maintain a consistent allocation to guaranteed rates within their client portfolios,” Bryan Pinsky, president of individual retirement at Corebridge Financial, said in a statement. “While most MYGAs default to a one-year rate at the end of their term, American Pathway Advisory allows consumers to easily renew for another three, five or seven years and possibly benefit from higher rates.”

The annuity offers tax-deferred growth, with no income taxes being paid until earnings are withdrawn.

RIAs can access MYGA, along with related educational tools and resources, on Corebridge’s RIA-dedicated website.

Compliance January 25, 2024

Aon Hit With $1.5M Penalty From SEC

The settlement stems from misleading statements made to the Pennsylvania Public School Employees’ Retirement System on its asset performance.

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The Securities and Exchange Commission Thursday settled charges with Aon, an investment adviser, for misrepresenting statements to the Pennsylvania Public School Employees’ Retirement System in a 2020 snafu that had wide-ranging consequences at the pension fund. Aon agreed to pay about $1.5 million in penalties and disgorgement.

“We are pleased with the developments today from the SEC and equally excited to be sharing such positive news with our members,” Pennsylvania PSERS Board Chairperson Richard Vague said in a statement.  “Additionally, I’d like to take the opportunity to thank staff at PSERS and our outside counsel for representing our membership so effectively in this matter.”

According to the SEC’s order, Aon reported mistaken asset performance data to Pennsylvania PSERS for the second quarter of 2015 and then misrepresented the reason for that discrepancy to the fund. The data that Aon reported was about 37 basis points higher (-0.1723 vs. -0.5087) than its previous reports to the fund.

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The error led to the calculation of a nine-year return of 6.38%, reported in June 2020, when it should have been 6.34%. This proved important because Pennsylvania law requires teachers to contribute more to their pension if asset returns underperform a benchmark, in this case 6.36%. The error caused Pennsylvania PSERS to initially report that the fund’s participants (or their employers) would not need to contribute more, then later inform them that they would.

As a result of the controversy, the fund was subject to a Department of Justice investigation—which closed in August 2022 without any finding of wrongdoing—and the pension fund’s executive director and CIO both resigned in 2021.

As part of the correction process, Pennsylvania PSERS asked Aon to investigate the gap between returns reported in 2020 and those reported in 2015. Aon responded that the gap reflected an adjustment based on more recent data. This answer was false. No after-the-fact adjustments had been made, and the error was based on faulty data entry.

Aon also reported to Pennsylvania PSERS that the adjustment reflected a change in market value related to a private credit fund. According to the SEC, Aon made this representation to Pennsylvania PSERS even after records showed that Aon had ruled out this explanation about one week earlier.

The SEC also fined an individual partner at Aon $30,000 for making the misleading statements.

Pennsylvania PSERS terminated its contract with Aon in December 2023; Aon had served as the fund’s adviser since 2013. Verus Investments is the new adviser for the fund, and there is a pending lawsuit brought by Pennsylvania PSERS against Aon in August 2023.

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