TIAA-CREF announces variable annuity income changes

April 18, 2012

If you are receiving retirement annuity income that is revalued annually for the variable annuity accounts (CREF accounts and TIAA Real Estate Account):

  • Changes in your monthly income begin on May 1, 2012, when income amounts adjust to reflect the performance of the markets in which each account invests. (See table below.)
  • Income will increase for most accounts
  • Income going down: CREF Money Market Account, CREF Stock Account and CREF Global Equities Account.
  • If your income is changing, a confirmation of annuity income statement will accompany the Outreach newsletter (PDF) mailed by the end of April to all participants receiving annuity income.

What impact will the change have on my retirement income?

If you are receiving income from CREF variable accounts and the TIAA Real Estate Account, income changes reflect account performance for the period ending March 30, 2012.

Annual percentage changes of variable annuity income (effective May 1, 2012)*

 Equity (Stock) AccountsReal Estate AccountBond, Money Market Accounts
CREF Growth: 6.78%
CREF Equity Index: 2.98%
CREF Social Choice: 2.67%
TIAA Real Estate: 8.89%CREF Inflation-Linked Bond: 8.19%
CREF Bond Market: 4.24%
CREF Stock: (-0.33%)
CREF Global Equities: (-3.37%)
 CREF Money Market: (-2.58%)

If you’re receiving lifetime annuity income from the TIAA Traditional Annuity, your income from that account will remain the same through December 2012.

Why did the income decline for the CREF Money Market Account, CREF Stock Account, and CREF Global Equities Account?

With the CREF Money Market Account, as a result of very low rates on short-term securities in which the account invests, it has been experiencing low yields. This reflects prevailing interest rates in the economy and affects money market accounts generally.

With the CREF Stock Account and CREF Global Equities Account, overall performance was limited by the returns of developed and emerging markets' foreign holdings, which realized declines of 5%-10% over the previous year (4/1/2011 – 3/30/2012).

It’s important to point out that the net investment returns were 0% for the CREF Money Market Account and positive for the other two accounts for 4/1/2011 – 3/30/2012: the time period we use to determine annuity income changes. But each account had less than a 4% net return during this time period. When we calculate your annuity income, we assume an interest rate of 4%. A net return above 4%, after adjustments, means your income will increase, but will decrease if the adjusted return is below 4%. Since each of the three accounts' adjusted net investment return was below 4%, the income will decline.

Can I change my annuity income allocation?

Yes. To change the investments from which you receive annuity income, you can:

  • Move your investments among the nine variable annuity accounts.
  • Transfer from the variable annuity accounts to the TIAA Traditional Annuity (as often as once per calendar quarter).
  • Transfer each year up to 20 percent of your TIAA Traditional Annuity to the CREF equity accounts. (Please note: You can’t shift this money back, so it’s important to evaluate the potential risks and rewards of increasing your exposure to equity markets.)

You can connect with one of our financial consultants at 800 842-2252 to:

  • Evaluate your retirement income changes and asset allocation
  • Help you make any transfers
  • Review your sources of income outside of TIAA-CREF to give you a complete picture of your retirement income needs and portfolio allocation

(If you have an assigned Wealth Management Advisor, call your Advisor team directly.)