Methods and systems for providing and maintaining retirement income

Abstract

Methods and systems for the provision of a targeted risk-protected minimum income benefit or protected distribution through the design and management of a trust that allows for exposure to the equity and fixed-income markets. The targeted minimum income amounts depend upon the performance of equity and fixed income assets and risk mitigation instruments contained in the Trust. The method and system rely upon the adjustment of constituent assets to provide for the targeted minimum retirement income amounts. The action of risk management procedures eliminate reliance upon third-party guarantors. The methods and systems include mortality management procedures that protect the participants against longevity risk.

Description

CROSS-REFERENCE TO RELATED APPLICATIONS[0001]This application is a continuation of U.S. application Ser. No. 14 / 069,829, filed Nov. 1, 2013, which is a division of and claims the benefit of pending U.S. application Ser. No. 12 / 967,920, entitled “Methods and Systems For Providing and Maintaining Retirement Income,” filed Dec. 14, 2010, now patented as U.S. Pat. No. 8,909,540, which claims the benefit of U.S. application Ser. No. 12 / 942,952, entitled “Methods and Systems For Providing and Maintaining Retirement Income,” filed Nov. 9, 2010, now abandoned, which claims the benefit of U.S. Provisional Application Ser. No. 61 / 259,350, entitled “Methods and Systems For Providing and Maintaining Retirement Income,” filed Nov. 9, 2009, the entire disclosure of each of which is expressly incorporated by reference herein.BACKGROUND OF THE INVENTION[0002]1. Fields of the Invention[0003]The present invention relates to methods and systems for the provision and maintenance of risk-protected retir...

AI Technical Summary

Benefits of technology

[0010]Embodiments of the present invention satisfy this and other needs. In general, embodiments of the present invention overcome problems and limitations of the prior art by providing a method and system for the allocation, management and disposition of assets held in a participant's retirement account, such as a defined contribution plan, that result in the ultimate production of retirement income in predictable and sufficient amounts. These retirement income amounts constitute significant participant protection from the risks of funding sufficiency, investment performance and participant longevity. As will be appreciated by those skilled in the art, embodiments of the invention result in an improved retirement savings system that more safely delivers income of sufficient amount that participants cannot outlive. Reducing costs and controlling the risks associated with offering retirement plans act to benefit both the participants and plan sponsors, offering peace-of-mind to potentially millions of current and future retirees.

[0012](1) the design and management of a protected minimum withdrawal, distribution or income benefit; the benefit constitutes significant participant protection against the risks of funding sufficiency, investment performance and longevity risk;

[0014](3) risk management procedures for the acquisition, allocation and disposal of risk mitigation instruments that contribute to the attainment of the protected minimum retirement withdrawal, distribution or income amounts contemplated by the benefit and that eliminate reliance upon the undependable performance of third-party guarantors;

[0015](4) mortality management procedures that protect against asset depletion over the natural lifetime, or other period, of the participant and thereby constitute significant protection against longevity risk;

[0017](6) a minimum retirement withdrawal, distribution or income benefit that may increase over time based on the investment and risk management performance of the Investment Advisors;

[0018](7) design variation flexibility that enables embodiments of the invention to be distributed via various retail or wholesale channels, in various end-consumer packaging, and under various arrangements of fees, commissions and charges;

Problems solved by technology

These risks may include those related to funding sufficiency, uncertain investment returns of plan assets, and realized participant mortality experience vs. mortality rate assumptions.

While stringent regulations apply to the operation of a defined-benefit plan, many companies have found the risks and costs associated with such plans to be burdensome, making them less common today.

Plan participants therefore bear the funding, investment and longevity risk (chance of outliving one's assets) involved with such a defined-contribution plan.

The performance of defined-contribution plans has been unsteady due to market volatility, causing particular difficulty for participants near or in their early retirement years.

However, annuity contracts significantly restrict participant access to funds, reduce assets available to beneficiaries and may not provide retirement income of a sufficient amount.

The ability of guarantors to stand behind such guarantees over the full life expectancies of participants is unknown and plan fiduciaries are reluctant to subject all or a significant portion of their plan participants to the claim-payment risk of one or more third party guarantors.

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