MassMutual Lifetime Income SM Simple. Certain. Guaranteed.

Transcription

1 A Guide for Financial Advisors MassMutual Lifetime Income SM Simple. Certain. Guaranteed. A guaranteed lifetime income option for your plan. Retirement Income Solutions FOR FINANCIAL INTERMEDIARIES USE ONLY. NOT FOR USE WITH PLAN SPONSORS OR PLAN PARTICIPANTS.

2 Retirement income so simple, it s patented. Securing a predictable stream of income in retirement is a primary concern for today s employees. In response, we present MassMutual Lifetime Income SM (MMLI), a patented 1 investment option designed specifically for 401(k) plans. MMLI guarantees 2 retirement income, while eliminating many challenges associated with traditional in-plan lifetime income options. As a fixed guaranteed lifetime income investment option, MMLI offers many pension-like attributes with income payments a participant cannot outlive. Unlike other in-plan lifetime income options, MMLI offers: simplicity income certainty generally more guaranteed lifetime income per dollar invested than other in-plan guaranteed lifetime income options Simple + Certain = The Power of 10 As with any other plan investment options, participants may invest in MMLI through salary deferrals and/or rollovers or exchanges to purchase income shares. Each income share guarantees $10 of monthly income for the participant s life, MMLI s simplicity makes it far easier to conduct income planning within a 401(k) plan. With proprietary design, equity market fluctuations can t negatively impact the income benefit providing additional peace of mind during both the planning and distribution phases. Income share pricing at a glance Daily MMLI income share pricing is based upon: Age: the younger the participant, the lower the prices Interest rates: prices generally decrease as interest rates increase and vice versa Life expectancy: prices reflect how long a participant (and spouse for joint payout options) are expected to live based on the issuing company s assumptions beginning at age = $10 Income share Guaranteed monthly income for life 1 MassMutual Lifetime Income and the related technology and processes are patented under U.S. Patent Nos. 7,805,352, 7,840,469, 7,853,509 and 7,979, MassMutual Lifetime Income is a group fixed deferred annuity issued by Massachusetts Mutual Life Insurance Company (MassMutual). Guarantees are based on the claims-paying ability of the issuer. 3 If the participant elects a joint annuity, period certain guarantee, annual increasing benefit, or a start date earlier or later than age 65, the monthly benefit amount will be actuarially adjusted. 2

3 Improving on the past. Built for the future. This chart explains how MassMutual Lifetime Income, a fixed deferred annuity, overcomes traditional challenges of variable annuity options, such as a Guaranteed Minimum Withdrawal Benefit (GMWB) design. These options involve withdrawing a guaranteed amount from the account balance, based on a guaranteed percentage applied to an income (benefit) base. Comparison between Guaranteed Minimum Withdrawal Benefit and MassMutual Lifetime Income Potential challenges with variable guaranteed income options (i.e., GMWB) Complex income benefit calculations and terminology Difficult to conduct income planning Less efficient expense structure Inflexible plan-level portability Potential consumer impact May be difficult for sponsor to communicate how it works and the amount of benefit at retirement (i.e., benefit base vs. account balance, step-ups) Calculating monthly income may be difficult because the guaranteed benefit amount is generally based on an unknown future account balance Participants generally cannot customize their amount of guaranteed income to cover a specific income gap Wrap fees (i.e., asset-based fees) may apply Ongoing fees may be applied for the guarantee and investment management during both accumulation and withdrawal phases Fees will reduce overall account value Participant may lose guaranteed benefit when plan sponsor changes recordkeeper How MassMutual Lifetime Income is different Each MMLI income share = $10 of monthly income for life beginning at age 65 (i.e., 50 shares = $500 monthly income) Each share of MMLI equals a known dollar amount ($10) that is not subject to equity market fluctuations, making income planning more predictable Participants can purchase the exact amount of lifetime income anticipated to be needed No ongoing/asset-based fees (i.e., wrap fees) 1 Income share price includes all costs to support the lifetime annuity income guarantee feature; once purchased, each share is owned outright Guaranteed income benefit can be preserved, even if participant terminates employment, or if the plan sponsor changes recordkeepers Solid benefits. Flexible features. Ability to cash out income shares and re-allocate to other plan investment options 2 Choice of when to begin income payments Multiple income payout options Death benefit coverage 1 If the plan sponsor charges plan expenses to participants, those fees and expenses will be deducted from participants investment in MassMutual Lifetime Income in a manner similar to the deductions of such amounts from other investment options. 2 MassMutual Lifetime Income offers a cash out option. Cash out values may be less than the contributions, are subject to volatility, and do not have a guaranteed rate of return. 3

4 Superior dollar-for-dollar efficiency. For many 401(k) investors, when it comes to financial security, certainty trumps potential. As a fixed guaranteed income investment option, MassMutual Lifetime Income typically will generate more guaranteed lifetime income on a per dollar basis than a variable option with a guaranteed minimum withdrawal benefit (GMWB). Purity of purpose makes it different. As a unique asset class, MassMutual Lifetime Income is designed primarily to provide guaranteed lifetime income to cover basic expenses in retirement. This makes MMLI different from traditional in-plan investment options even those with the objectives of income generation or income preservation. MassMutual Lifetime Income: legend 1 legend 2 Works as part of a diversified investment portfolio Should comprise the portion of a portfolio dedicated to providing certain (fixed) income in retirement Should be supplemented with the balance of the portfolio allocated to diversified investments The best of both worlds: Certainty and room for growth MassMutual Lifetime Income Diversified Investments 4

5 What s the price for peace of mind? Points to consider Why risk income certainty or sacrifice reward? The chart below illustrates the upside potential of the markets over time. It also illustrates the potential risks. MMLI offers peace of mind that s not subject to market volatility 1 ideal for participants who want to guarantee retirement income while retaining the freedom to capture upside potential with the rest of their allocations. Eroding value According to the Institutional Retirement Income Council (2013), variable options that support guaranteed income (i.e., GMWB) are subject to an average expense of 169 basis points. This is applied to the entire portfolio and will reduce its value. Should a participant s circumstances change, MMLI offers the ability to cash out income shares. Keep in mind that cash out values fluctuate based on interest rates and may be less than a participant s contributions if interest rates rise. Please refer to the MMLI Fact Sheet and Summary Booklet for more details. To learn more, call MassMutual s Sales Support at , option 4. Pension-like attributes at no additional cost to your clients Defined benefit plans can be expensive, require significant administration, and place the investment risk on the employer. Offering MMLI can help your clients provide employees with a guaranteed income option, while shifting accountability to participants and potentially reducing existing plan expenses. Dow Jones Industrial Average (DJIA) yearly total returns Year % return 2 Year % return 2 Year % return 2 Year % return The Dow Jones Industrial Average (DJIA) is an unmanaged, price-weighted index of 30 of the largest, most widely held stocks traded on the NYSE. The index is unmanaged and not available for direct investment. 1 MassMutual Lifetime Income is an annuity designed to provide longevity protection to participants. It is not intended to be a fixed interest or other accumulation investment. 2 Source: Morningstar, Inc. 5

6 Notes: 6

7 Notes: 7

8 MassMutual. We ll help you get there. MassMutual Lifetime Income benefits are provided by a group annuity issued by Massachusetts Mutual Life Insurance Company under the form number GP 9000, GP 9100 countrywide. State-specific variations will have the state s initials after the form number. This group annuity contract is not available in New York. The purpose in purchasing MassMutual Lifetime Income is to provide lifetime retirement income. MassMutual Lifetime Income offers a cash-out option as a secondary option which allows participants to cash out their investment at any time until they start receiving annuity payments. Cash-out values may be less than the contributions and do not have a guaranteed rate of return. The purpose of this liquidity feature is to provide flexibility in the event a participant s circumstances change unexpectedly. MassMutual Lifetime Income is not intended to be an investment vehicle in which interest is accumulated. The cash-out value will increase or decrease depending on interest rates and participants may lose principal when interest rates increase, particularly if cashed out shortly after purchase. Group fixed annuity guarantees, including any credited rate of interest or annuity payout rates, are backed by the claim-paying ability of the issuing company, Massachusetts Mutual Life Insurance Company. The broker/dealer or insurance agency from which this annuity is purchased, and any affiliates of those entities, neither back the guarantees, nor make any representations or guarantees regarding the claims-paying ability of the issuer. NOT A BANK OR CREDIT UNION DEPOSIT OR OBLIGATION NOT FDIC OR NCUA INSURED MAY GO DOWN IN VALUE NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT GUARANTEED BY ANY BANK OR CREDIT UNION 2015 Massachusetts Mutual Life Insurance Company, Springfield, MA All rights reserved. MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) [of which Retirement Services is a division] and its affiliated companies and sales representatives. RS C: