Vanguard has introduced a new web-based service that enables individuals
to compare income annuities from leading insurance companies. Income
annuities are insurance contracts purchased with a single lump sum that
offer immediate income payments (usually monthly) for a specified period
or for the annuitants lifetime.
“Traditionally, annuities have been viewed as complex products that were
sold and not bought. Vanguard Annuity Access brings the tools and
transparency to the annuity-buying process, enabling self-directed
individuals interested in a paycheck for life option to make an
informed decision”
Vanguard
Annuity Access, powered by Hueler
Companies Income Solutions platform, is designed for individuals
seeking a guaranteed* stream of income in retirement to augment their
investment holdings, workplace retirement plan, and Social Security
benefits. The service can be particularly attractive to retirement plan
participants rolling their assets over to a Vanguard IRA (individual
retirement account) as they retire. Prospective purchasers can obtain
customized quotes on a real-time basis and evaluate competitively
priced, directly comparable contracts from multiple companies.
Traditionally, annuities have been viewed as complex products that were
sold and not bought. Vanguard Annuity Access brings the tools and
transparency to the annuity-buying process, enabling self-directed
individuals interested in a paycheck for life option to make an
informed decision, said Tim Buckley, managing director of Vanguards
Retail Investor Group.
Mr. Buckley added that the new annuity service complements Vanguards
market-based options for retirees, which include systematic withdrawals
from a diversified portfolio of low-cost Vanguard mutual funds, Vanguard
Managed Payout Funds, and retirement income plans developed by a
Certified Financial Planner (CFP) professional.
Hueler Companies has been a leading provider of web-based annuity
purchase systems since 2004. The firm now provides participants in more
than 1,000 defined contribution plans access to income annuities as a
tax-deferred rollover option for their retirement assets.
The new Vanguard Annuity Access service is a powerful collaboration
that brings together Huelers proven low-cost annuity platform with
Vanguards trusted name, said Kelli Hueler, CEO of Hueler Companies.
Now prospective annuity purchasersboth retirement-ready plan
participants completing a rollover and transitioning individual
investorswill benefit from an easy-to-use online resource supported by
Vanguards licensed, non-commissioned annuity specialists.
Income Annuities for DC Plan Participants Entering Retirement
Defined contribution plan sponsors are paying increased attention to
retirement income strategies, with the goal of providing their
participants with the education and tools they need to translate their
lump-sum benefits into sustainable income. Since many sponsors are
concerned that in-plan options such as income annuities will lead to
added fiduciary responsibility and increased plan complexity, Vanguard
Annuity Access will be offered to participants as an IRA rollover option.
More than 80% of retiring participants in Vanguard-administered DC
plans leave their employers plan within three years, typically for an
IRA rollover account. As a result, our plan-sponsor clients are
interested in an outside-the-plan guaranteed income program, said
Barbara Fallon-Walsh, head of Vanguard Institutional Retirement Plan
Services. Many plan sponsors offer the Vanguard Financial Plan service
for their participants aged 55 and older, which provides them with free
access to a CFP who can help them with retirement income planning.
Vanguard Annuity Access represents an additional service they can offer
participants entering retirement.
Vanguard provides recordkeeping and investment services to 3.5 million
participants and 1,700 plan sponsors in more than 2,500 defined
contribution plans.
Plain Talk about the Risks of Income Annuities
John Ameriks, head of Vanguard Investment Counseling & Research
co-author of Vanguard retirement income research (including Generating
Guaranteed Income: Understanding Income Annuities) encourages
retirees to weigh the pros of guaranteed income versus the cons, which
include loss of investment liquidity, the potential reduction in
bequeathable wealth, and the risk of default of the underlying insurer.
Costs are another important consideration. The investment management,
distribution, administrative and other costs associated with fixed
annuity products are reflected in annuity quotes. As a result, the
apples-to-apples comparability of quotes at the time they are obtained
is critical in evaluating whether contracts are competitive among their
peers.
Vanguard Annuity Access is designed to provide competitive payments to
investors, resulting from the meaningful competition among insurance
companies on the Income Solutions platform and from the institutional,
or group-rate, pricing of the annuities offered. The quotes should also
be competitive because of the low transaction fee of 2%** of the annuity
purchase amount.
For retirees who place a high value on having an additional lifetime
income guarantee beyond Social Security and a pensionand are willing to
accept the costs and risks of annuitizationlow-cost income annuities
can be an important part of a broader investment plan, said Mr. Ameriks.
Fixed Deferred Annuities Also Available
The Vanguard Annuity Access service will also offer access to fixed
deferred annuities with fixed interest durations ranging from three to
seven years. These savings vehicles are designed for tax-sensitive
investors wishing to supplement other forms of retirement savings, such
as 401(k) plans and IRAs. A fixed deferred annuity lets clients earn a
fixed interest rate on their savings for a set number of years. Both the
interest rate and principal are guaranteed by the insurance company that
issues the annuity.
About Hueler Companies, Inc.
Hueler Companies, Inc. and its affiliates (together, the Hueler
Companies), located in Minneapolis, Minnesota, was founded in 1987 as a
stable value consulting and data research firm. Today, Hueler Companies
is a leading technology and research firm offering key resources for the
analysis, research and implementation of stable value and annuity
products. In 2004, Hueler Investment Services, Inc. launched Income
Solutions, a web-based immediate income annuity purchase system
designed as an IRA rollover option and for transitioning investors to
purchase institutionally priced annuities with their retirement savings.
About Vanguard
Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the
worlds largest investment management companies. Vanguard manages nearly
$1.4 trillion in U.S. mutual fund assets. Vanguard offers more than 160
index and actively managed funds to U.S. investors and more than 50
additional funds in non-U.S. markets. Vanguard provides recordkeeping
and investment services to 3.5 million participants and 1,700 plan
sponsors in over 2,500 defined contribution plans, and is also a major
provider of investment, advisory, and recordkeeping services to defined
benefit plans.
Vanguard annuity specialists are licensed through Vanguard Marketing
Corporation.
* Guarantees are subject to the claims-paying ability of the issuing
insurance company.
** The annuity quotes provided are net of the 2% fee. The dollar amount
invested is the amount that is being placed in the contract. Any
additional costs the issuer bears are factored into the pricing of the
product.
All asset figures are as of August 31, 2010, unless otherwise noted.
All investments are subject to risk.
The Managed Payout Funds are not guaranteed to achieve their investment
objectives, are subject to loss, and some of their distributions may be
treated in part as a return of capital. The dollar amount of a funds
monthly cash distributions could go up or down substantially from one
year to the next and over time. It is also possible for a fund to suffer
substantial investment losses and simultaneously experience additional
asset reductions as a result of its distributions to shareholders under
its managed distribution policy. An investment in a fund could lose
money over short, intermediate, or even long periods of time because
each fund allocates its assets worldwide across different asset classes
and investments with specific risk and return characteristics.
Diversification does not necessarily ensure a profit or protect against
a loss in a declining market. The funds are proportionately subject to
the risks associated with their underlying funds, which may invest in
stocks (including stocks issued by REITs), bonds, cash, inflation-linked
investments, commodity-linked investments, long/short market neutral
investments, and leveraged absolute return investments.
Vanguard Annuity Access is provided by Vanguard Marketing Corporation
and is offered in collaboration with Hueler Investment Services, Inc.
through the Income Solutions platform. Income Solutions is a registered
trademark of Hueler Investment Services, Inc. and used under license.
United States Patent No. 7,653,560. Products may not be available in all
states.
For more information about Vanguard funds, visit www.vanguard.com,
or call 800-662-7447, to obtain a prospectus. Investment objectives,
risks, charges, expenses, and other important information about a fund
are contained in the prospectus; read and consider it carefully before
investing.
Vanguard Marketing Corporation, Distributor of the Vanguard Funds.

Source: Business Wire