Vitera Expands Guaranteed Income Solutions in DC Market

In an exclusive interview, Vitera’s new CEO, Rebecca Tadikonda, explains the firm’s recent share class launch, market demand and re-branding.

Reported by Emily Boyle.

This article was originally published by Plan Adviser.

Vitera LLC, previously known as Annexus Retirement Solutions LLC, announced on Monday a new institutional share class for the State Street GTC Retirement Income Builder Target Date Fund Series. The I Class shares expand access to multi-carrier guaranteed income for the largest defined contribution plans.

State Street Investment Management serves as the asset manager of I Class shares, and Global Trust Co. serves as the trustee.

The announcement follows Apollo Global Management, Athene and Motive Partners’ purchase of Annexus Retirement Solutions in March, as well as Vitera’s appointment of Rebecca Tadikonda as the company’s new CEO, on October 15.

Solving for Innovation

In an exclusive interview with PLANADVISER, Tadikonda shared that Vitera has been working to field a product that provides participants with automatic income without sacrificing what they enjoy about their current target-date funds. While she said the industry has done “good work” to help participants accumulate assets, managing spending in retirement is what “falls back on the individual.”

Tadikonda says participants value:

• Liquidity: for example, being able to withdraw assets in the event of a large medical bill;
• Portability: allowing people to take the retirement income they have accumulated in their plan with them if they leave their current employer’s plan; and
• Low costs: avoiding higher fees related to the addition of a retirement income offering.

Participants “want income, want it to be automatic and want their employer to provide it to them right in their plan,” Tadikonda said. “Very few plans offer something like that today.”

Vitera’s new offering provides guaranteed income as an asset class and uses its flagship technology, Lifetime Income Builder, to embed that asset class into a TDF. Tadikonda said providing the I Class shares for larger plans “finishes the job.”

The Lifetime Income Builder offers participants a maximum 6% withdrawal rate: 4.5% is guaranteed for life, and 1.5% is dependent upon equity-market performance. Monte Carlo simulations of I Class shares have found that 85% of the time, participants are able to maintain a 6% withdrawal rate—even into their 90s, according to Tadikonda.

On the plus side, too, Tadikonda said that people tend to spend more in their earlier years of retirement than they do later on. Trading more income in early decades for potentially slightly less later on “meets the needs of most Americans’ spending patterns.”

While Vitera has already brought to market a series of TDFs aimed at small- and medium-sized plans, the pricing was too high for large and mega plans to adopt, Tadikonda said. For the I Class shares, the company came up with pricing closer to what companies with the largest plans would pay for a standard TDF.

Demand, Rebrand, Future Plans

When asked about the trajectory of growth for TDF-embedded retirement income products in the large- to-mega-plan market, Tadikonda said “the voice of the employee” is clear: They want these solutions. She called the demand a great opportunity for “industry participants,” including insurance carriers, annuity providers and asset managers.

Aside from launching its product, Tadikonda said she and the company plan to bring to market private-asset investment products, as well as more guaranteed income solutions.

The State Street GTC Retirement Income Builder Target Date Fund Series, now including the I Share class, is currently available on plans recordkept by Nationwide Retirement Solutions, Transamerica Corp. and more than 40 small recordkeepers on the iJoin platform. According to Tadikonda, the company is actively in discussion with other recordkeepers to make the product accessible to more plans.

Additionally, the firm recently changed its name to Vitera from Annexus Retirement Solutions—in the wake of the firm’s purchase.

We asked, “‘What are we trying to provide? What is the spirit of what we’re trying to provide in terms of an income solution?’” Tadikonda said. “It’s really about living a great life. … Vitera comes from the root of a full life.”