T. Rowe Price Enters In-Plan Lifetime Income Market

On Tuesday, the T. Rowe Price Group Inc. launched its own annuity-backed lifetime income product for defined contribution plans. The firm’s Managed Lifetime Income investment product, designed for retirees in DC plans, combines T. Rowe Price’s managed payout investment with a qualified longevity annuity contract, or QLAC, from Pacific Life Insurance Co.

MLI integrates into T. Rowe Price’s existing participant platform, which includes a retirement income estimator that allows individuals to customize their retirement savings. Under MLI, retirees will receive payments from the managed payout investment for the first 15 years of retirement, after which QLAC payments will provide guaranteed income.

“We understand that a common concern among retirees is whether they will have sufficient income for their remaining years,” Francisco Negrón, head of Retirement Plan Services at T. Rowe Price, said in a statement. “The introduction of MLI underscores our dedication to ensuring retirees can feel financially secure about their future.”

The introduction of MLI follows the launch of T. Rowe’s Retirement Income 2020 managed-payout fund in 2017 and its Retirement Income 2025 fund. Retirees can choose between a solution with or without guaranteed lifetime income.

The move comes in response to a growing trend for T. Rowe Price’s 401(k) clients, among whom 52% of plan participants aged 60 and older remain in-plan for at least four years after retirement, according to the firm. Its latest white paper suggested that pairing a drawdown strategy with a deferred annuity can better address the income and liquidity needs of retirees looking to maximize financial security.

More than 83% of participants in plans on T. Rowe Price’s recordkeeping platform are invested in target-date products, including those offered by T. Rowe Price, according to Negrón. As of June 30, T. Rowe Price managed $453 billion in target-date assets, while its total defined contribution assets under management reached $688 billion, revealed in company disclosures.

T. Rowe Price is now among the asset managers and insurers that have, in recent years, introduced guaranteed income options for 401(k) investors. BlackRock Inc., J.P. Morgan Asset Management, State Street Global Advisors and TIAA’s Nuveen are some of the providers already operating annuity-backed investment vehicles for defined contribution plans.

Furthermore, responses to a Hearts & Wallets survey from August showed that in-retirement-plan annuity options may be gaining favor, with providers potentially finding traction by leaning into “pension nostalgia.”