MetLife, Inc. MET recently teamed up with the renowned Massachusetts-based financial services provider, Fidelity Investments, to devise a fixed immediate income annuity and offer it through the latter’s newly launched retirement income solution, Guaranteed Income Direct. MET’s shares gained 0.3% on Feb 28.

The collaboration also involves middleware provider Micruity, which leverages a single point of service for hassle-free data sharing between insurers, asset managers, recordkeepers and related stakeholders. This, in turn, leads to the easing of administrative burden and an improved user experience of retirement income products.

The new guaranteed income offering of MetLife, named the MetLife Guaranteed Income Program, enables defined contribution (“DC”) plan participants to buy an immediate income annuity from an insurer chosen by their plan sponsors or employers, in this case, and subsequently, annuitize any proportion of their savings. The funds, which will not be utilized for the annuity purchase, stay within the plan.

The assurance of a guaranteed stream of income may prove to be a blessing for retirees, who can plan their everyday expenses, as well as prevent the fast depletion of their savings. This, in turn, is expected to equip them to lead a more financially secure future and infuse greater peace of mind.

Annuitizing one’s savings is a way better option than receiving retirement savings in a lump sum as the latter often has the risk of fast exhaustion of the money and emergence of the need to finance a part of the retirement years. According to a MetLife study, one in three retirees who took a lump sum payment from their DC plan depleted the savings within an average of five years.

Additionally, the passing of the Setting Every Community Up for Retirement Enhancement Act in late 2019 eliminated the fiduciary obstacles encountered in providing lifetime income solutions via the workplace. Hence, there remains an increasing interest of plan participants to opt for these products.

The latest move of expanding access to immediate income annuities therefore can be termed as a time opportune move on the part of MetLife. It may lead to increased utilization of MetLife’s retirement income offering, expand its customer base and fetch higher adjusted premiums, fees and other revenues to the Retirement and Income Solutions segment. Adjusted premiums, fees and other revenues, excluding pension risk transfers, of the unit surged 67.4% year over year in 2023. MetLife boasts a longstanding history and exceptional capabilities in offering retirement income solutions.