Financial services leader Prudential Financial Inc. (PRU) yesterday entered into an agreement with ICMA Retirement Corporation (“ICMA-RC”) to roll out a new retirement solution for public sector employees.
The guaranteed retirement-income solution will be known as “VantageTrust Retirement IncomeAdvantage Fund”. It will have features similar to Prudential IncomeFlex − a market-leading, in-plan guaranteed retirement-income product − and will be sponsored by ICMA-RC.
ICMA-RC is planning to roll out this product to its present customers. The plan will invest in low-cost stock index and bond fund and is meant primarily for participants who have 10 to 15 years to retire.
ICMA-RC offers financial planning and manages and administers retirement plans exclusively for public-sector employees. A not-for-profit organization, it offers products including retirement health savings plans, IRAs, 401(a)s, 401(k)s, and 457s. The company serves more than 900,000 employees of state and local governments, offering some 9,000 retirement savings plans in all.
The product, dubbed as guaranteed retirement-income, is touted to shield the investors against losses from a decline in equity markets by providing a minimum income, but which would increase their income if the equity markets improve, thereby providing an opportunity to capture market upswings.
Prudential Retirement offers retirement plan solutions for public, private and non-profit organizations. It contributed approximately 27% of Prudential Financial’s 2009 revenues and is a key to its top-line growth. Gradually improving equity markets have led to an increased sale of variable annuities, increasing revenues, a trend that is expected to continue.
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