AllianceBernstein Expands Retirement Income Offerings with AB Secure Income Portfolio

Rhea-AI Summary

AllianceBernstein L.P. (AB), a global investment firm with $759 billion in assets, expands retirement income offerings with the AB Secure Income Portfolio. The portfolio provides guaranteed retirement income for Defined Contribution plans without changing their target-date provider. It offers higher growth assets exposure, liquidity, and flexibility for participants. AB has been a pioneer in customizable lifetime income solutions, accumulating over $11 billion in assets. The portfolio is available through an institutional separate account and a collective investment trust (CIT).

Positive

• AB expands retirement income offerings, providing guaranteed retirement income for Defined Contribution plans without changing target-date provider.

• The AB Secure Income Portfolio offers higher exposure to growth assets, liquidity, and flexibility for participants.

• AB has a successful track record as an innovator in customizable lifetime income solutions, accumulating over $11 billion in assets.

Negative

• None.

Insights

Financial Analyst

The introduction of the AB Secure Income Portfolio represents AllianceBernstein's strategic move into an area of high demand within the retirement planning sector. With the shift from traditional pension plans to Defined Contribution plans, securing retirement income has become a pressing concern for aging populations. The potential of this offering is to tap into the $7.9 trillion U.S. Defined Contribution market, which could be significant for AllianceBernstein's future revenue streams. The partnership with reputable insurers for backing the guaranteed income feature implies solidity and can be a competitive advantage, enhancing AB's proposition in a crowded market. The firm's track record with over $11 billion in assets in its Lifetime Income Strategy, including $4.2 billion in secured income benefits, suggests a robust foothold in the market. While the offering may attract long-term assets and potentially increase AUM, it also brings challenges such as dependency on the performance of insurer partners and the need for rigorous management of growth asset exposure in the decumulation phase. The financial fortitude of insurers is a key consideration for investors, as it underpins the guarantee promises made to plan participants.

Retirement Planning Specialist

AllianceBernstein's AB Secure Income Portfolio addresses a critical gap in income security for retirees, particularly with the guarantee of lifetime income. The flexibility in implementation, as highlighted by their optionality to integrate with existing target-date funds or as a standalone choice, showcases adaptability to both plan sponsors and participants. This approach adheres to the evolving regulatory landscape that encourages retirement plan sponsors to include lifetime income options within their plans. The portfolio's enhanced exposure to growth assets relative to typical target-date funds may appeal to participants balancing long-term income generation against the backdrop of inflation and longevity risks. However, the sustainability of higher growth asset exposure as a retiree ages is a complex balance that requires diligent risk management. Prospective investors should weigh the liquidity aspect against their retirement income needs and consider the impact of fund costs on their net returns. The success of such income streams also hinges on the financial stability of the insurers providing the guarantees.

Insurance Industry Analyst

The AB Secure Income Portfolio's dependence on the claims-paying ability of its partnered insurers introduces an insurance perspective to the analysis. The financial strength of insurers such as Jackson National Life Insurance, Lincoln National Life Insurance Company and Nationwide Life Insurance Company is pivotal for guaranteeing retirement income. As the portfolio is backed by a competitive bidding process among insurers, the underpinning strength and the diverse sources of backing could potentially diversify and mitigate risks for participants. The insurers' meticulous selection process reflects on AllianceBernstein's due diligence in enhancing product reliability. Still, investors should note the inherent risks of insurance-based guarantees—it's essential for the investor to assess the insurers' creditworthiness regularly to ensure long-term security. Fluctuations in the insurance market, regulatory changes and macroeconomic factors may affect insurers' ability to meet their obligations, which can reflect on the portfolio's performance and reliability.

NASHVILLE, Tenn., May 9, 2024 /PRNewswire/ -- AllianceBernstein L.P. ("AB") (NYSE: AB), a leading global investment firm with $759 billion in assets under management, today announced the expansion of its retirement income offerings with the AB Secure Income Portfolio. This solution will enable Defined Contribution (DC) plans to offer an investment option that delivers guaranteed retirement income to participants without changing their target-date provider, including as a part of a Qualified Default Investment Alternative (QDIA).

The AB Secure Income Portfolio is a professionally managed option that seeks to provide income for life* and higher exposure to growth assets in retirement years than with typical target-date funds, while also providing participants liquidity and access to their assets. This solution is designed for flexible implementation, adapting to plans' diverse needs and preferences—whether it's alongside a plan's existing target-date fund, as an allocation in a managed account or in a "do-it-yourself" approach, with participants selecting AB's Secure Income Portfolio from their plan's core menu. The portfolio is currently available through an institutional separate account and will be available through a collective investment trust (CIT) managed by AB. 

"As more plan sponsors evaluate the retirement income solutions available today and move toward adoption, many are looking for more flexibility in the ways they can implement these solutions," said AB's Head of Defined Contribution Jennifer DeLong.

As an early innovator and leader in providing customizable lifetime income solutions to DC plans, AB has been working with large plan sponsors to help them provide lifetime income to their participants since AB's Lifetime Income Strategy was launched in 2012. The Lifetime Income Strategy may serve as a qualified default investment alternative, combining AB's expertise in glide path design with a flexible guaranteed-income portfolio backed by multiple insurers. The solution has accumulated more than $11 billion in assets, including $4.2 billion in secured income benefits (as of 3/31/2024).

The AB Secure Income Portfolio has been a component of AB's Lifetime Income Strategy for more than a decade. "We've listened to the input from plan sponsors, and we're excited to evolve our suite of services to adapt to their changing needs. Providing plans with a new way to access lifetime income through a DC-friendly CIT will give plan sponsors the convenience and optionality they're looking for," said Ms. DeLong.

Guarantees are provided by insurers selected through a competitive bidding process based on a number of factors, including financial strength. The initial insurers for the CIT may include Jackson National Life Insurance Company® (Jackson®), Lincoln National Life Insurance Company and Nationwide Life Insurance Company*.

For more information on the AB Secure Income Portfolio, visit our website. Please note that this strategy will only be available to certain eligible investors.

*Guarantees are subject to the claims-paying ability of each insurance company.

About AllianceBernstein

AllianceBernstein is a leading global investment management firm that offers diversified investment services to institutional investors, individuals, and private wealth clients in major world markets. As of March 31, 2024, AllianceBernstein had $759 billion in assets under management. Additional information about AB may be found on our website, www.alliancebernstein.com.

 

View original content:https://www.prnewswire.com/news-releases/alliancebernstein-expands-retirement-income-offerings-with-ab-secure-income-portfolio-302140904.html

SOURCE AllianceBernstein

FAQ

What is the AB Secure Income Portfolio?

The AB Secure Income Portfolio is a professionally managed option that delivers guaranteed retirement income for Defined Contribution plans without changing their target-date provider.

How does the AB Secure Income Portfolio differ from typical target-date funds?

The AB Secure Income Portfolio provides higher exposure to growth assets, liquidity, and flexibility for participants compared to typical target-date funds.

How can participants access the AB Secure Income Portfolio?

Participants can access the AB Secure Income Portfolio through their plan's core menu, alongside a plan's existing target-date fund, or as an allocation in a managed account.

What is the total assets accumulated by AB's Lifetime Income Strategy?

AB's Lifetime Income Strategy has accumulated over $11 billion in assets, including $4.2 billion in secured income benefits as of 3/31/2024.

Which insurers provide guarantees for the CIT?

Insurers selected through a competitive bidding process provide guarantees for the CIT, including Jackson National Life Insurance Company, Lincoln National Life Insurance Company, and Nationwide Life Insurance Company.