GREAT-WEST SECUREFOUNDATION

Transcription

1 GREAT-WEST SECUREFOUNDATION Unless otherwise noted: Not a Deposit Not FDIC Insured Not Guaranteed by Any Bank Not Insured by Any Federal Government Agency Funds May Lose Value

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3 PROVIDE A SECURE FOUNDATION As a plan sponsor, you can be confident that your Plan s investment lineup is built to give participants guaranteed retirement income along the journey to and through retirement with Great-West SecureFoundation. About Great-West SecureFoundation Regardless of the industry you re in or the products and/or services you may provide, there is a shared goal that you have with other organizations that serve a dual role as both employer and plan sponsor. That goal is facilitating a bright future for your employees. And you can make strides toward achieving that goal today with the adoption of Great-West SecureFoundation (SecureFoundation), which is available when you add the Great-West SecureFoundation Lifetime Funds target date fund options or the Great-West SecureFoundation Balanced Fund option to your Plan s investment lineup. SecureFoundation from Great-West Financial SM provides participants with a new, innovative way to plan for their retirement income needs by: 4Protecting their retirement income when the market goes down 1 4Allowing them to benefit when the market goes up 4Providing retirement income for life 2 Collectively, those three key benefits address challenges your participants may face related to their retirement planning strategy, including worries about market volatility, inflationary concerns, and retirement income sustainability. 1 SecureFoundation s guaranteed income benefit does not guarantee the investment performance of the applicable Great-West SecureFoundation Fund. Its guaranteed income benefit is subject to the claims paying ability of Great-West Life & Annuity Insurance Company. Neither Great-West Funds, Inc. nor Great-West Capital Management, LLC is responsible for any payments under SecureFoundation s guaranteed income benefit. 2 Excess Withdrawals or transfers out can deplete the Covered Fund Value and affect the potential guaranteed income benefit. For Broker, TPA, Advisor and Plan Sponsor Use Only. 2

4 Why Choose SecureFoundation? Win-win opportunities are often sought but not always found. So when they do arise, it s important to take full advantage. Based on some statistics that are central to the retirement planning process, SecureFoundation can be the solution you and your participants have been looking for: Only 6% of workers are very confident that the Social Security system will continue to provide benefits of at least equal value to the benefits received by retirees today 4FORTY-SIX PERCENT of workers indicate that they are either very likely or somewhat likely to buy or choose a guaranteed income product 3 4Only 33% of workers report that either they or their spouse have a defined benefit plan with a current or former employer 3 4Only 6% of workers are very confident that the Social Security system will continue to provide benefits of at least equal value to the benefits received by retirees today 3 And just as the statistics show a true need for a solution to address real participant retirement concerns, the benefits of SecureFoundation extend beyond your participants to directly address your responsibilities and obligations as a plan sponsor. SecureFoundation brings a combination of growth potential and income protection - at an affordable cost to your client. 3 Employee Benefit Research Institute, 2012 Retirement Confidence Study. 3 For Broker, TPA, Advisor and Plan Sponsor Use Only.

5 Upside Potential SecureFoundation is a retirement plan solution designed specifically to address longevity risk, or the risk of outliving one s money. It combines a Covered Fund with a contingent deferred annuity contract to provide participants with guaranteed retirement income for life, regardless of market performance once the Benefit Base has been established. 4Through a mix of underlying equity and fixed income investments, it allows for market participation in periods of strong market performance, potentially increasing the Benefit Base. The Benefit Base is an amount used to calculate future income benefits and has no monetary value. 4On each Anniversary Date of the initial contribution, the Benefit Base will be increased if the Covered Fund Value exceeds the prior Benefit Base. The Covered Fund Value is the current value of the Great- West SecureFoundation fund held in the account, which will fluctuate with market conditions, whereas the Benefit Base is used to calculate guaranteed retirement lifetime income payments. Guarantee Trigger Date Retirement Date Covered Fund Value Benefit Base Ratchet Upside Potential Value Covered Fund Value Downside Protection Retirement Income Lifetime Guaranteed Retirement Income Year % of Benefit Base Accumulation Phase Guaranteed Annual Withdrawal Phase 21 Settlement Phase The chart shown above is for illustrative purposes only. It is intended to show a hypothetical depiction of how a participant can lock in any Covered Fund Value gains by ratcheting up his or her Benefit Base if the market is up. In year 10, the income payments begin. In year 21, the value of the fund decreases due to poor market performance or withdrawals, and a guaranteed benefit stream remains for life. Downside Protection With the SecureFoundation guaranteed income benefit issued by Great-West Life & Annuity Company, the participant s retirement income is protected from market volatility and periods of negative investment returns. So whether the market goes up or down, your participant s lifetime retirement income payments are protected. The Guaranteed Annual Withdrawal (GAW) is guaranteed for a participant s lifetime (or the lifetime of the participant and his or her spouse if joint covered persons is elected). 2 The GAW amount is the amount based on the Benefit Base and it cannot be adjusted downward simply because the Covered Fund Value decreases due to poor market performance. A participant will receive a set amount of retirement income, regardless of market performance, as long as his or her withdrawals do not exceed GAWs. 4 4 A full withdrawal of the Covered Fund Value other than through GAWs will result in an automatic cancellation of the the SecureFoundation guaranteed income benefit. A client may reapply after 90 days from the date of cancellation. For Broker, TPA, Advisor and Plan Sponsor Use Only. 4

6 To protect your Participant s future, choose income with staying power. Fortunately, SecureFoundation provides an innovative approach that can help your participant fight back against inflation. The GAW associated with the SecureFoundation guaranteed income benefit can adjust upward with increases in the market if it would result in a larger GAW for your client. Essentially, if the market goes up, your client s GAWs can go up creating a potential hedge against inflation that is often seen in a rising rate environment. On the other hand, if the market goes down after your client s income begins, your client s GAW percentage will remain steady. It can never be reduced. 1 Use the table below as a guide to understand which circumstances might cause your particpant s income to increase. If the market And the Covered Fund Value Then the GAW amount goes up goes up can go up goes down goes down will not change goes down goes up can go up (due to Ratchet) goes up goes down can go up FOR ILLUSTRATIVE PURPOSES ONLY. This hypothetical illustration is not intended to represent actual performance or predict performance of the investment option. If the Covered Fund Value drops due to market performance, participants will retain the previously locked-in higher Benefit Base, which will maintain the previously established Guaranteed Annual Withdrawal amount. While in the Guaranteed Annual Withdrawal Phase, participants can still benefit from a positive market because the Benefit Base will still Ratchet up if the Covered Fund Value is higher than the Benefit Base on the Anniversary Date. This is how Great-West SecureFoundation allows participants to continue to benefit when the market goes up. 5 For Broker, TPA, Advisor and Plan Sponsor Use Only.

7 A Cost-Effective Solution There are no Plan fees associated with adding covered funds to your Plan s investment lineup. 5 Participants who allocate assets to covered funds will be subject to the fee associated with SecureFoundation, along with any fees charged by the underlying mutual funds. We ve worked to make the fees competitive with the other investment options in your Plan and in the broader market. From a plan sponsor s point of view, there is more to cost than fees. There s also the time and effort you spend adding covered funds to your Plan and educating participants. Great-West Financial has developed solutions to assist you along the way. Meeting Your Fiduciary Responsibilities As a plan fiduciary, you have an obligation to assess the needs of your Plan s participants when selecting investment options. With SecureFoundation, you can have greater confidence that you re meeting your participants needs by offering them a guaranteed retirement income option within your Plan that also complements any anticipated pension or Social Security benefits. In addition, the funds associated with SecureFoundation are validated as Qualified Default Investment Alternatives (QDIAs) by DALBAR, Inc. (Dalbar). 6 This validation lets you know that these funds meet the regulatory requirements for a QDIA and supports the process of selection and monitoring of QDIAs required of plan fiduciaries. Dalbar, a financial services market research firm with a 30-year history, is acknowledged by industry and government as an independent third-party expert in the business of providing evaluations, ratings and due diligence. 7 Securing Guaranteed Retirement Income In the past, securing guaranteed retirement income while still working has been difficult for participants. SecureFoundation makes this easier by allowing participants to contribute to a guaranteed retirement income product while still employed. Take Advantage of Up Markets When a participant invests in a fund associated with SecureFoundation, he or she has the opportunity to take advantage of up markets on the fund s Ratchet Date. See page 4 for more information. 5 Depending on your Plan s design, other fees could apply. 6 Neither Great-West Life & Annuity Insurance Company nor any of its subsidiaries or affiliates are affiliated with DALBAR, Inc. 7 DALBAR, Inc., January Details of the certification may be found at For Broker, TPA, Advisor and Plan Sponsor Use Only. 6

8 Backed by the strength of Great-West Financial SM A LEADER IN FINANCIAL SERVICES Drawing on more than a century of experience, Great-West Financial helps millions of Americans, their companies and employers build greater financial security. Our offerings range from retirement savings products and services to life insurance, annuities and executive benefits products. Headquartered in metro Denver, we serve customers nationwide through offices around the country. We market our products and services through sales and service professionals, brokers, consultants, advisors, thirdparty administrators and financial institutions. INSURANCE COMPANY STRENGTH AND STABILITY Our financial strength and stability is typified by the strong ratings given by major ratings agencies to our insurance company, Great-West Life & Annuity Insurance Company. Superior (A+) Very Strong (AA) Excellent (Aa3) Very Strong (AA) by A.M. Best Company, Inc. (highest of 10 categories) by Fitch Ratings (second-highest of nine categories) by Moody s Investors Service (second-highest of nine categories) by Standard & Poor s (second-highest of nine rating categories) Reflects the current ratings for Great-West Life & Annuity Insurance Company; ratings are subject to change. Ratings do not pertain to the investment performance of the fund and underlying funds. SecureFoundation s guaranteed income benefit is not rated by any rating agency. RETIREMENT SERVICES AND RECORDKEEPING Great-West Financial is the nation s fourth largest retirement plan record keeper as measured by participant accounts. 8 We provide retirement savings products and services for public, corporate and nonprofit employers, as well as private-label recordkeeping and administrative services for other providers of defined contribution plans. We also offer fund management, investment and advisory services. Growth Potential Up To and Through Retirement Your participants can experience the freedom of remaining invested in the equity and fixed income markets, regardless of market conditions. They will have the flexibility of being able to take their money out of the Covered Fund without restrictive charges. Of course, Excess Withdrawals and Transfers Out will affect the Benefit Base and GAW. 8 PLANSPONSOR, June 2013 (as of Dec. 31, 2012). 7 For Broker, TPA, Advisor and Plan Sponsor Use Only.

9 INVESTMENT CHOICES The Great-West SecureFoundation Lifetime Funds 9 are target date funds designed to meet investment goals based on a participant s investment horizon (such as expected retirement date and personal objectives). Depending on its proximity to the year designated in the name of the Great-West SecureFoundation Lifetime Fund, each fund employs a different combination of investments, including index fund to minimize costs, in order to gradually shift its emphasis from more aggressive investments to more conservative ones. The date in the Great-West SecureFoundation Lifetime Funds represents the approximate date when the investor would expect to start taking withdrawals. The lifetime retirement income guarantee and the Guarantee Benefit Fee begins immediately for the Great-West SecureFoundation Lifetime 2015 and 2020 Funds, and begins 10 years before the target date for the other Great-West SecureFoundation Lifetime Funds. 11 The Covered Fund Value is not guaranteed at any time, including the target date; however, the Benefit Base is guaranteed. The Great-West SecureFoundation Balanced Fund 9 is an asset allocation fund comprised of a variety of fixed income and equity index funds. It maintains a steady asset allocation of equity investments of 50-70% at all times. And it invests in index funds to keep costs low. The guaranteed income benefit and the Guarantee Benefit Fee are in effect as of the first contribution. Funds The Great-West SecureFoundation Lifetime Funds comprise nine different target dates 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050 and Fees The annual Guarantee Benefit Fee (currently 0.9%) on the Covered Fund Value is charged by Great-West Life & Annuity Insurance Company when the Guarantee is triggered. Both the Great-West Lifetime Funds and the Great-West Balanced Fund are subject to a fund operating expense at the fund level, as well as a prorated fund operating expense of each underlying fund in which it invests. Prior to selecting investment options for your Plan, Plan Sponsors should consider the investment objectives, risks, fees and expenses carefully before investing. For this and other important information, please refer to the fund s prospectus and the SecureFoundation Summary Disclosure Statement or prospectus for 403(b) clients. You may obtain these documents from your registered representative. Read them carefully before making a selection. 9 The Great-West SecureFoundation Lifetime Funds and Great-West SecureFoundation Balanced Fund are managed by Great- West Capital Management, LLC (GWCM) and may invest in other funds advised by GWCM, funds that are sub-advised by affiliated and unaffiliated sub-advisers retained by GWCM and funds that are advised by affiliated and unaffiliated investment advisers of GWCM. The Great-West SecureFoundation Lifetime Funds may also invest in a fixed interest contract issued and guaranteed by Great-West Life & Annuity Insurance Company. Great-West Funds, Inc. and GWCM are subsidiaries of GWL&A. For Broker, TPA, Advisor and Plan Sponsor Use Only. 8

10 SecureFoundation Next Steps To make sure you have everything you need to make an informed decision about SecureFoundation refer to the following Facts at a Glance and/or speak to your Great-West Financial representative for more details. SECUREFOUNDATION FACTS AT A GLANCE FEATURES GREAT-WEST SECUREFOUNDATION GUARANTEE PHASES BENEFIT BASE DETAILS»» Accumulation Phase This is the phase in which participants seek to build up the value of their savings in the SecureFoundation fund. This phase ends upon the participant s first Guaranteed Annual Withdrawal payment.»» Guaranteed Annual Withdrawal Phase This phase is the period in which participants receive regular distributions from their SecureFoundation fund.»» Settlement Phase This final phase is the period when a participant s Covered Fund Value has reached zero but the Benefit Base is positive. Under the terms of the contract, this phase allows the Guaranteed Annual Withdrawals to continue as a percentage of the participant s Benefit Base. The Benefit Base is used to calculate guaranteed income benefit, has no monetary value, and is different from the Covered Fund Value. It is established when the participant enters the Accumulation Phase or with the first contribution or rollover that triggers the Guarantee. There is a separate Benefit Base associated with each Great-West SecureFoundation fund. CONTRIBUTIONS Salary contributions and transfers-in are accepted during the Accumulation Phase. All contributions increase the Benefit Base dollarfor-dollar. A 90-day transfer-in restriction applies after any transfer out. This does not apply to paycheck contributions or loan repayments. COVERED FUND VALUE The Covered Fund Value is the current value of each of the SecureFoundation funds. 9 For Broker, TPA, Advisor and Plan Sponsor Use Only.

11 SECUREFOUNDATION FACTS AT A GLANCE (CONTINUED) FEATURES DETAILS The GAW is based on a percentage of the Benefit Base using the following schedule and is locked in when the first withdrawal is taken. GUARANTEED ANNUAL WITHDRAWAL (GAW) Single: 4% for life, ages 55 to 64 5% for life, ages 65 to 69 6% for life, ages 70 to 79 7% for life, ages 80+ Joint: 0.5% reduction from Single Excess Withdrawals and Transfers Out are permitted during the GAW Phase. Please see the disclosure documents for more details. GUARANTEE BENEFIT FEE Currently, the fee is 0.9% of the Covered Fund Value. The amount of the Guarantee Benefit Fee will not be lower than 0.7% or higher than 1.50%. Great-West Financial reserves the right to change the Guarantee Benefit Fee at any time upon 30 days written notice. GUARANTEE TERMINATION RATCHET DATE/ ANNIVERSARY DATE GUARANTEE TRIGGER DATE A full withdrawal of the Covered Fund Value other than as a result of the GAW will result in an automatic cancellation of the guaranteed income benefit. During the Accumulation Phase, the Ratchet Date is the anniversary of the date the participant s Benefit Base is established and each anniversary thereafter. During the GAW Phase, the Ratchet Date is the first GAW date and each anniversary thereafter. 9 The day the SecureFoundation guaranteed income benefit is effective for the Great- West SecureFoundation Lifetime Funds. It is the first business day of the year 10 years before the date in the name of the fund, or immediately for the Great-West SecureFoundation Lifetime 2015 and 2020 Funds. Since the SecureFoundation guaranteed income benefit is effective upon initial contribution to the Great-West SecureFoundation Balanced Fund, there is no Guarantee Trigger Date for this investment option. Great-West SecureFoundation guaranteed income benefit is provided through a contingent deferred annuity contract issued by Great-West Life & Annuity Insurance Company (GWL&A) to the plan sponsor. The Great-West SecureFoundation contract is GWL&A s promise to provide a payment of guaranteed income subject to the terms and conditions of the contract and claims paying ability of GWL&A. 9 If any anniversary in the Accumulation and GAW Phases is a non-business day, the Ratchet Date will be the preceding business day for that year. For Broker, TPA, Advisor and Plan Sponsor Use Only. 10

12 FOR BROKER, TPA, ADVISOR AND PLAN SPONSOR USE ONLY. Core securities, when offered, are offered through GWFS Equities, Inc. and/or other broker dealers. GWFS Equities, Inc., Member FINRA/ SIPC, is a wholly owned subsidiary of Great-West Life & Annuity Insurance Company (GWL&A). The principal underwriter of Great-West Funds, Inc. is affiliate GWFS Equities, Inc. GWFS Equities, Inc., or one or more of its affiliates, may receive a fee from the investment option provider for providing certain recordkeeping, distribution and administrative services. Core investment options offered through a group fixed and variable deferred annuity issued by GWL&A, mutual funds, separately managed accounts, and/or collective trust funds. Great-West SecureFoundation guaranteed income benefit is not available in New York and may not be available in all states. Please check with your advisor or Great-West Financial representative for more information. Great-West Financial SM refers to products and services provided by GWL&A, Corporate Headquarters: Greenwood Village, CO, its subsidiaries and affiliates, including Great-West Funds, Inc. and Great-West Capital Management, LLC. All trademarks, logos, service marks, and design elements used are owned by their respective owners and are used with permission. All rights reserved Great-West Life & Annuity Insurance Company. All rights reserved. Form# G4098PSB PT# (09/13) Unless otherwise noted: Not A Deposit Not FDIC Insured Not Bank Guaranteed Not Insured By Any Federal Government Agency Funds May Lose Value