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US pension provider TIAA-CREF considers UK launch

Nick-McBreen.gif

US pension provider TIAA-CREF is considering a move into the UK market, Money Marketing understands.

The financial services firm offers retirement products, savings plans, mutual funds and life insurance, as well as advice offerings in the US.

It is understood to be looking at launching a UK-based business.

TIAA-CREF was cited in the Department for Work and Pensions’ paper, Reinvigorating Workplace Pensions, published last month.

The policy paper sets out a number of possible models for ‘defined ambition’ occupational schemes, which were first mooted by pension minister Steve Webb in April.

In July, Webb urged providers to develop pension products with “affordable” guarantees. The minister wants to encourage employers to share some of the risks and uncertainties of retirement with their employees.

The DWP says one of TIAA-CREF’s leading products is the ‘traditional annuity’, a guaranteed annuity product offered to participants in employer-sponsored schemes.

During the accumulation phase, the employee can purchase pension income using some of their accumulated fund. This income is guaranteed at a minimum rate.

In the decumulation phase, individuals take their guaranteed minimum income plus any additional amounts owed due to strong investment returns.

A further uplift to retirement income may come from the reserves held back during the accumulation phase for the guarantees. These are distributed by TIAA-CREF as additional annuity income as the need for reserves declines.

TIAA-CREF currently provides retirement plans at more than 15,000 colleges, universities, schools, research centers, medical organisations and other non-profit institutions in the US.

The firm declined to comment on whether it is planning to launch a UK arm.

Worlwide Financial Planning IFA Nick McBreen (pictured) says: “The problem is providers cannot afford to fund guarantees and when I hear of a new entrant coming to take the UK market by storm I have to say, we have heard it all before.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. “During the accumulation phase, the employee can purchase pension income using some of their accumulated fund. This income is guaranteed at a minimum rate.

    In the decumulation phase, individuals take their guaranteed minimum income plus any additional amounts owed due to strong investment returns.”

    Surely not “with profits deferred annuities”? Whatever next?

  2. i agree with Nick Breen, we have heard it all before. the last thing needed is another new insurer/ pension co dipping in and then out of the market. so that transfers have to be considered. build it as an insured fund which can be purchased by gpps or plaform/wrap & a client can take a risk on it, but not a nither oension co with no uk trackrecord.

  3. This has more to do with the way these US firms are structured taxwise and product wise in the US. Yes, we have seen it all before, Acuma, Hartford, Lincoln, AIG… Metlife seems to have stayed the course so far but not cheap products. Then Metlife is not really a UK firm is it, it has a UK branch of it’s Dublin subsiduary, which is part of Metlife Europe, owned by Metlife US!

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