TIAA Traditional Annuity Attracts Most Participant Dollars of TIAA-CREF Accounts
December 03, 2009
The TIAA Traditional Annuity remains a centerpiece of participants’ retirement portfolios, providing an attractive combination of account features and an excellent complement to TIAA-CREF’s equity, fixed-income, money market and real estate investment offerings. Today, more participant dollars are allocated to the TIAA Traditional Annuity than to any other TIAA-CREF product, leading TIAA-CREF to top a ranking of stable value and funding agreement assets under management among 17 life insurance companies, according to an industry source.1 Stable value assets are a category of products designed to safeguard capital and deliver consistent returns.
"Our ranking reflects our years of work helping clients to accumulate retirement assets and create a guaranteed stream of income in retirement,"2 said Scott Evans, head of asset management, TIAA-CREF. "TIAA-CREF’s consistent, long-term approach to investing, focused on seeking growth over time, coupled with a commitment to sober risk management, has allowed us to continue to deliver on our commitments on our stable value and guaranteed account offerings through a wide variety of market cycles."
Assets held in the TIAA general account that backs client commitments in the TIAA Traditional Annuity, across all retirement plans and accounts, totaled $189 billion as of September 30, 2009. The TIAA Traditional Annuity guarantees principal and pays a guaranteed minimum interest rate during the accumulation phase with the potential for greater growth through additional amounts, which may be declared on a year-by-year basis by the TIAA Board of Trustees. These additional amounts, when declared, remain in effect for the "declaration year" which begins each March 1.
"Two-thirds of TIAA-CREF plan participants have allocated funds to TIAA Traditional, which helped these individuals during the economic crisis of the past year since a portion of their account was protected through the guarantees provided by TIAA Traditional," added Ed Van Dolsen, head of Product Development and Management, TIAA-CREF. "This underscores the important role that diversified portfolio construction, including a guaranteed option such as TIAA Traditional, plays in helping plan sponsors achieve retirement plan objectives such as helping participants build a safer and more secure retirement."3
The TIAA Traditional Annuity, along with TIAA-CREF’s broad range of products, is designed to help participants’ weather periods of economic instability and meet their long-term financial needs. By providing a guaranteed stream of income that one cannot outlive, it can serve as the foundation of a complete retirement savings program that works as a personal pension plan. TIAA-CREF paid 500,000 retirees $10 billion in income in 2008.
The TIAA general account backing TIAA Traditional primarily invests in corporate and government bonds, structured finance instruments (such as mortgage-backed securities) and real estate.4 Accumulations can be converted to a fixed life annuity in retirement, among other withdrawal options. The TIAA Traditional Annuity is the organization’s flagship product and has been offered since it’s founding in 1918. TIAA has paid amounts in addition to the minimum guarantee each year since 1948.
TIAA continues to hold the highest insurance financial strength ratings from all four independent insurance ratings agencies and has a strong capital base of $17 billion to help ensure its claims-paying ability.5
About TIAA-CREF
TIAA-CREF (www.tiaa-cref.org) is a national financial services organization and the leading provider of retirement services in the academic, research, medical and cultural fields with $402 billion in combined assets under management (9/30/09).
Abby Aylman Cohen, Manager, Corporate Media Relations
aacohen@tiaa-cref.org, 212 916-4381 Cell: 917 596-4758
1Source: LIMRA International, 1Q2Q 2009 Stable Value and Funding Agreement Product Survey.
2Subject to TIAA’s claims paying ability.
3TIAA Traditional is a guaranteed insurance contract and not an investment for Federal Securities Law purposes. Investments in securities do not offer the safety and security of a fixed annuity such as TIAA Traditional and are subject to market risk, including possible loss of principal.
4The returns and payment obligations of the TIAA Traditional Annuity are backed by TIAA’s claims-paying ability. It is important to note, however, that participants do not participate in the performance of the TIAA general account holdings. Instead, those who choose to allocate a portion of their retirement savings to the TIAA Traditional Annuity make contributions that purchase a specific amount of future lifetime income, based on the contractual-rate schedule in effect at the time the contribution is made.
5TIAA is rated A++, A.M. Best Company (as of 9/08); AAA, Fitch Ratings (as of 6/09); Aaa, Moody’s Investors Service (as of 5/09); AAA, Standard & Poor’s (as of 6/09) - the highest possible ratings from these independent analysts.
