ING Lifetime Income Protection Program

Transcription

1 ING Lifetime Income Protection Program A target date asset allocation program with a lifetime retirement income guarantee Your future. Made easier.

2 As a result of ongoing market volatility many retirement plan participants, like you, may now realize that retirement planning is not just about seeking growth and managing risk. It s also about being able to count on having a certain amount of retirement income no matter what happens in the market and no matter how long you live.

3 The ING Lifetime Income Protection Program (the Program ) is a target date asset allocation program available through defined contribution retirement plans ( Plans ) that are qualified under Section 401(a) of the Internal Revenue Code (the Code ) or that constitute eligible deferred compensation plans under Section 457(b) of the Code. The Program provides various target date asset allocation models or portfolios, 1 each of which includes a Glide Path through which amounts are automatically allocated between the following investments: Target date collective trust funds (the Funds ), which we refer to as the Non-Guaranteed portion of the portfolio; and Multiple variable annuity contracts (individually a Contract and collectively the Contracts ), each issued by a different insurer, which we refer to as the Guaranteed portion of the portfolio The Contracts provide a Minimum Guaranteed Withdrawal Benefit ( MGWB ), which provides for guaranteed lifetime income in retirement. 2 A portfolio s Glide Path automatically allocates a Plan Participant s account balance and contributions/transfers between the Funds and the Contracts based on the portfolio s target date. When the portfolio is more than 17 years away from its target date, 100% of a Participant s investment is allocated to the Funds in the Non- Guaranteed portion of the portfolio. Approximately 17 years before a portfolio s target date, the portfolio s Glide Path begins to periodically allocate an increasing portion of a Participant s account balance and contributions/transfers to the Contracts in the Guaranteed portion of the portfolio. Over time the percentage allocated to the Contracts increases, until five years before the portfolio s target date when 100% of a Participant s investment will be allocated to the Contracts. See your ING Lifetime Protection Program Guide for further details. The Contracts available through the Program provide: A guaranteed retirement income stream Downside income protection Income growth potential MGWB Minimum Guaranteed Withdrawal Benefit 1 A portfolio s allocation between the Funds and the Contracts is based on the portfolio s Glide Path, which increases the allocation to the Contracts as the portfolio approaches its target date. A portfolio is not an investment separate from its allocation between the Funds and Contracts, is not an investment company and has not been registered with the Securities and Exchange Commission under the Investment Company Act of 1940 or the Securities Act of All guarantees under a Contract are subject to certain conditions and limitations and to the claims paying ability of the issuing insurer. The guarantee under the Contracts is of the MGWB and not of the accumulation or individual account values. The accumulation values and individual account values under each Contract are not guaranteed and may lose value. 1

4 Accumulates Guaranteed Retirement Income Over Time CONTRACT ALLOCATION 100% 75% 50% 25% 0% Assets allocated to the Funds in the Non-Guaranteed portion YEARS BEFORE RETIREMENT RETIREMENT AGE 65 EQUITY BOND Assets allocated to the Contracts in the Guaranteed portion 5 Pies represent the broad equity-to-bond allocations over time. Approximately 17 years prior to a portfolio's target date, an increasing percentage of your assets will be periodically allocated between the Funds and the Contracts available through the Program. Your Guaranteed Income Stream Under the Contract May Go Up In this hypothetical example, if you retire at 65 and start your income stream, you are guaranteed to receive $6,207 each year even if your individual account value is zero or less (other than by an Excess Withdrawal or Surrender). After you retire, if the market is increasing, your retirement income stream increases with your MGWB base. $100,000 $111,421 $114,754 $118,088 $124,143 $124,143 $5,000 AGE 60 $5, $5, $6, $6, And It s Protected When Markets Decline In this hypothetical example, if you retire at 65 and start your income stream, you are guaranteed to receive each year even if your individual account value is zero or less (other than by an Excess Withdrawal or Surrender). If during the first year of your retirement the market declines, your income stream of remains the same. $100,000 $111,421 $114,754 $114,754 $114,754 $114,754 $5,000 AGE 60 $5, MGWB ACCOUNT VALUE GUARANTEED ANNUAL INCOME STREAM

5 The Contracts available through the portfolios in the ING Lifetime Income Protection Program help to address these concerns by providing: A guaranteed retirement income stream through a minimum guaranteed withdrawal benefit ( MGWB ) Guaranteed income for life that is diversified through contract guarantees provided by multiple insurers. Downside income protection Because of the MGWB your future retirement income from the Contracts is safeguarded even if your assets invested through the Contracts decline in value as a result of market downturns. Income growth potential The ability for your MGWB guaranteed income amount to grow based on an increase (the technical term is ratchet ) of your MGWB benefit base due to positive market performance. MGWB MGWB Minimum Guaranteed Withdrawal Benefit Your Contract account balance can be passed on to your beneficiaries during the Program's Lifetime Withdrawal Phase. $128,000 $131,000 $134,000 $134,000 $134,000 $6, $6, When you re 70, even if your account runs out of money, you will continue to receive for the rest of your life, subject to certain conditions. $6, $6, $6, Multiple insurance companies split the responsibility of guaranteeing the retirement income payouts, which diversifies risk and helps you receive a competitive withdrawal rate. $114,754 $114,754 $114,754 $114,754 $114,754 These are hypothetical examples to help illustrate guaranteed income stream and are not intended to predict investment performance. They assume a 5% withdrawal rate, and the actual withdrawal rate may be higher or lower. Investments through the ING Lifetime Income Protection Program portfolios are not protected against loss of principal; at any time your individual account value can be more or less than the original amount contributed including at the portfolio s target date

6 Growth potential in the early years The ING Lifetime Income Protection Program portfolios are structured much like other target date investment options. The Program portfolios are offered in five-year increments, and you are automatically allocated through the portfolio with a target date closest to your retirement date (assuming retirement at age 65) based on your date of birth. In the early years when the target date is more than 17 years away, you get the potential for growth because assets are invested in a corresponding Fund, which is a diversified portfolio appropriate for a typical investor your age. Guaranteed income for life 1 Approximately 17 years from the portfolio s target date, the portfolio s Glide Path begins to periodically allocate an increasing portion of your assets, new contributions and transfers between the Funds in the Non-Guaranteed portion of the portfolio and the Contracts in the Guaranteed portion, and your MGWB base is established. The MGWB base is the amount used to calculate your guaranteed annual income amount to be received each year in retirement. Over time the percentage allocated to the Contracts increases, until five years before the portfolio s target date when 100% of your portfolio assets are allocated to the Contracts and factored into the MGWB base. Upside potential with downside income protection Every year on your birthday, ING compares your current MGWB base to your existing individual account value in the Contracts. If the value in the Contracts is higher than your MGWB base, your MGWB base is increased to the higher amount. If that amount is lower, your MGWB base does not change. This allows you to benefit from potential market gains while providing protection from market losses. The previous charts illustrate how it works. Starting your income stream The Contracts available through the ING Lifetime Income Protection Program protect you against the risk of outliving your money. The Contracts are designed for you to begin taking annual withdrawals at age 65, but you have the flexibility to begin withdrawing at any time between the ages of 62 and If you elect to begin your income stream before age 65, your guaranteed income payout rate will be slightly lower. If you elect to begin your income stream after age 65, your guaranteed income payout rate will be slightly higher. The type of MGWB you choose will also affect your income stream. For example, if you choose single life MGWB (meaning your MGWB lasts for the rest of your life only), your income stream will be slightly higher than if you choose a joint MGWB for you and your spouse. In that case, you receive a reduced income stream, but it will last as long as either of you live. Your spouse must be the primary beneficiary of your retirement plan assets for a joint MGWB. As you receive your income stream, the payments will reduce your individual account value, but your MGWB base will always stay the same unless you withdraw more than your maximum annual withdrawal ( MAW ). If you choose to withdraw more than your MAW, your MGWB base and the amount of your future income stream will be reduced pro rata. 4

7 What are the fees and expenses? There are separate charges associated with the Funds in the Non-Guaranteed portion and the Contracts in the Guaranteed portion of the Program. The charges include investment management fees, charges for the MGWB and fees associated with operating the Program. Please refer to the Program Guide for details about the fees and charges associated with each portion of a portfolio. How do I choose an ING Lifetime Income Protection Program Portfolio? You can choose to invest through an ING Lifetime Income Protection Program portfolio at any age. If you choose to invest, you will be automatically placed into a portfolio based on your birth year and assuming a retirement age of 65 (see the table above). You have the flexibility to invest all or just a portion of your savings and/or future contributions through the portfolio. This automatic portfolio selection makes the single-choice simplicity of a typical target date even easier. Birth Year ING Lifetime Income Protection Program Portfolio Vintages ING Lifetime Income Protection Portfolio ING Lifetime Income Protection Portfolio ING Lifetime Income Protection Portfolio ING Lifetime Income Protection Portfolio ING Lifetime Income Protection Portfolio ING Lifetime Income Protection Portfolio ING Lifetime Income Protection Portfolio ING Lifetime Income Protection Portfolio ING Lifetime Income Protection Portfolio 2015 Before 1948 ING Lifetime Income Protection Income Portfolio Knowing you have guaranteed income for life regardless of what happens in the financial markets can make it easier to plan a retirement lifestyle that fits your needs. Consider making an ING Lifetime Income Protection Program portfolio part of your long-term retirement planning strategy. MGWB Minimum Guaranteed Withdrawal Benefit 1 All guarantees under a Contract are subject to certain conditions and limitations and to the claims paying ability of the issuing insurer. Premature or excess withdrawal from the Contracts in the Guaranteed portion of the portfolio will reduce or eliminate your guaranteed income payout and may also have tax consequences. See the Program Guide for details. Speak with your financial professional before making any withdrawal decisions. 2 Premature or excess withdrawals will reduce and may altogether eliminate the MGWB. 5

8 Important Information: The ING Lifetime Income Protection Program portfolios are target date asset allocation models that allocate Plan Participant contributions between target date collective trust funds (the Funds ) and multiple variable annuity contracts (the Contracts ), each issued by a different insurer, based on the portfolio's target date. A portfolio is not an investment separate from its allocation between the Funds and Contracts, is not an investment company and has not been registered with the Securities and Exchange Commission under the Investment Company Act of 1940 or the Securities Act of This is not a complete description of the Program. Please see the ING Lifetime Income Protection Program, Program Guide for more detailed information about the Program, its Glide Path and the Minimum Guaranteed Withdrawal Benefit ("MGWB") provided through the Contracts. There is no guarantee that the ING Lifetime Income Protection Program portfolios will achieve their stated investment objective. The value of a Participant s investment in the Funds and/or Contracts will fluctuate. Portfolio performance to or through any point in time, including the target date, is not guaranteed. The target date is merely an approximation of the date when an average investor is anticipated to begin receiving withdrawals from the Contracts. The value of a Participant s investment on the date the target date is reached could be less than the value of their original investment. Each portfolio invests in Funds and in the Contracts. The allocation to the Contracts is maintained at zero until approximately 17 years prior the portfolio s target date. At that point, the portfolio s Glide Path begins a 12 year process of gradually allocating between the Funds and the Contracts. Five years prior to the portfolio s target date, 100% of the assets allocated through a Program portfolio will be allocated to the Contracts. The allocations to the Contracts follow a predetermined Glide Path. Amounts allocated to the Contracts will not be reallocated to the Funds. Allocations between the Contracts are determined according to a predetermined Contract Allocation Formula, which spreads allocations between the Contracts according to the then available withdrawal rates offered by each insurer. The Funds available through the Program portfolios are the ING Target Solution Trust Fund series (used when Participants are 100% allocated to the Funds) and the ING Lifetime Income Protection series (used when amounts begin to be allocated to the Contracts). The investment objective of the ING Target Solution Trust Fund series is to outperform its primary benchmark, the S&P Target Date Index series, while the investment objective of the ING Lifetime Income Protection series is to outperform its primary benchmark, the Morgan Stanley Composite Index - All Country World Index (MSCI-ACWI) as well as their respective strategic benchmarks which comprise the weighted average of each fund's strategic asset allocations. Prior to each Fund s target date, the Fund seeks to provide Participants with the highest possible ending wealth and replacement income while exposing them to the lowest level of volatility/downside risk. The Funds strategies seek to provide growth potential in the early years. The ING Target Solution Trust Fund series is managed as a fund-of-funds strategy under which the trustee of each Fund invests primarily in other collective trust funds according to an asset allocation which is adjusted for each ING Target Solution Trust Fund with the passage of time. The allocation to collective trust funds is determined by two factors the trustee s proprietary asset allocation and underlying trust fund selection. The number of collective trust funds to which the trustee allocates may increase or decrease over time depending on market conditions and the availability of underlying trust funds. Most of the Funds employed in the Program are current existing collective trust funds, in which investors can also invest directly; the trustee may also establish new collective trust funds for use by the Program and other investors. The trustee will exercise prudence and discretion in allocating assets among underlying trust funds with different active as well as passive management approaches. The Contracts available through the Program portfolios will seek to provide both total return to and through each portfolio s designated target date as well as a guaranteed stream of retirement income through the Minimum Guaranteed Withdrawal Benefit ( MGWB ) feature described below. It is possible to lose money through the Program portfolios. Stocks are more volatile than bonds, and investments with a higher concentration of stocks are more likely to experience greater fluctuations in value than investments with a higher concentration in bonds. Foreign stocks and small- and mid-cap stocks may be more volatile than large-cap stocks. Investing in bonds also entails credit risk and interest rate risk. Generally investors with longer time frames can consider assuming more risk in their investments. Guaranteed retirement income is available through a MGWB feature in the Contracts. The MGWB guarantees the availability of a predetermined, periodic withdrawal amount for life, subject to certain conditions and limits. Premature or excess withdrawals will reduce and may altogether eliminate the MGWB. The MGWB will be determined using a number of different factors, including the Participant s MGWB base and the dollar-weighted average withdrawal rate. The MGWB base is not the individual Participant s account value in the Contracts, cannot be withdrawn, and is used only for calculating the guaranteed income in retirement. Withdrawal rates are assigned by each life insurer that issues a Contract participating in the Program and may differ over time and according to whether investments in the Contracts are attributable to new contributions or to transfers. See the ING Lifetime Income Protection Program Guide for further details. All withdrawals reduce the account value. Excess withdrawals are any withdrawals taken from the Contracts before guaranteed retirement income payments begin or withdrawals in excess of the maximum annual withdrawal amount that are taken after guaranteed retirement income payments begin, with the exception of withdrawals taken to satisfy either required minimum distributions attributable to the Plan and paid from the Plan under Code Section 401(a)(9) if such required minimum distributions are paid on a pro rata basis from each of the Plan s designated investment alternatives or certain fees and charges associated with the Contracts. Early withdrawals and other distributions of taxable amounts may be subject to ordinary income tax, and, if taken prior to age 591 2, an IRS 10% premature distribution penalty tax may apply. The multiple variable annuity Contracts in which the ING Lifetime Income Protection Program invest are each issued by a different insurer. Each insurer is responsible only for the obligations under its own Contract and has no obligation or responsibility with respect to the Contracts issued by the other insurers. All obligations under a Contract are subject to limitations and restrictions and the claims paying ability of the issuing insurer. The individual Contracts in which the ING Lifetime Income Protection Program invest are currently issued by AXA EQUITABLE LIFE INSURANCE COMPANY, New York, NY, policy form # AE11- GRIF (may vary by state), ING LIFE INSURANCE AND ANNUITY COMPANY, Windsor, CT, policy form # G-GRIF-11 (may vary by state) and NATIONWIDE LIFE INSURANCE COMPANY, Columbus, OH, policy form # VAC-0125AO (may vary by state). The individual account value under each Contract will fluctuate and may be worth more or less than the original amount allocated; however, any decreases in value due to market performance will not affect the MGWB guarantees of future retirement income. The Funds and Contracts may be available separately, and you may contact an ING representative to check for availability. Plan administrative services provided by ING Life Insurance and Annuity Company ("ILIAC") or ING Institutional Plan Services, LLC ("IPS"). Securities distributed by ING Financial Advisers, LLC ("IFA") (member SIPC) or other broker-dealers or selling firms with which it has a selling agreement. ILIAC, IPS and IFA are members of the ING family of companies. AXA Equitable Life Insurance Company and Nationwide Life Insurance Company are not affiliated with the ING family of companies. May not be available in all states. Not FDIC/NCUA/NCUSIF Insured Not a Deposit of a Bank/Credit Union May Lose Value Not Bank/Credit Union Guaranteed Not Insured by Any Federal Government Agency C.P (1/12) 2012 ING North America Insurance Corporation C R (1/12)