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Genworth Study Shows QDIAs with Guaranteed Income Increase Lifetime Financial Security


RICHMOND, Va., May 16 /PRNewswire-FirstCall/ -- As America's employers continue to move from defined benefit (DB) to defined contribution (DC) plans, the responsibility for saving for retirement and securing retirement income has shifted from employers to employees. Plan participants are now faced with a myriad of 401(k) investment options, and they must manage their longevity risk to ensure they do not outlive their retirement savings. Indeed the "risk of ruin", that is, the risk of running out of money in retirement is now a significant issue for American workers. While the introduction of Qualified Default Investment Alternatives (QDIA) has enabled Plan Sponsors to help participants accumulate retirement savings, a new study released today by Genworth Financial at their 2008 Retirement Symposium in Washington, DC, reveals that adding guaranteed income to a QDIA can help to avert the risk of ruin for participants and help them generate even higher income levels in retirement.

Conducted by Oliver Wyman in partnership with Mercer Retirement Consulting, the study, entitled Providing for Secure Retirements: Guaranteed Income as a Qualified Default Investment Alternative, reveals that adding guaranteed lifetime income to a traditional Target Date Fund (which reallocates risk with age) or Balanced Fund can increase a 401(k) participant's starting retirement income by up to 53% and improve average retirement income by up to 30%. At the same time, guaranteed income eliminates the significant risk that a participant will exhaust their savings. In fact, the study shows that an individual who retires at age 65 and annually withdraws an inflation adjusted 5% of his or her initial account balance from a traditional Target Date Fund stands a 75% chance of running out of money by age 95.

"The addition of guaranteed income to a QDIA offers Plan Sponsors the opportunity to provide their participants with the best attributes of a defined benefit plan in a defined contribution vehicle," said Fred Conley, president of Genworth's Institutional Retirement Group. "This solution helps participants to get the best of all worlds -- flexibility, growth potential and security -- all within one investment choice."

The study shows that guaranteed income products allow 401(k) participants to benefit from strong financial markets, while also offering protection against periods of poor market returns. Additionally, with increasing retirement expenses and longer life spans, participants can lock in the certainty of having a source of guaranteed lifetime income.

"This research aims to provide Plan Sponsors with information to help make QDIA decisions best suited for their particular workforce," Conley added. "If a Plan Sponsor's employee base requires help with proper asset allocation during the accumulation phase, there is a good chance they will also need help converting those assets into lifetime income during the distribution phase. Now there is a quantitative study that can help Plan Sponsors better compare approved QDIA options. "In response to the Pension Protection Act of 2006, the U.S. Department of Labor issued a regulation in 2007 creating a fiduciary safeharbor for Plan Sponsors using QDIAs.

ClearCourse(R), a group variable annuity issued by Genworth Life and Annuity Insurance company, Genworth Financial Company, combines the lifetime income benefit feature of a DB plan with the growth potential normally associated with stock and bond investments found in DC plans. ClearCourse offers both an Annuitization Benefit, which helps maximize a participant's lifetime income amount, and a Withdrawal Benefit, which provides lifetime income with more control over assets during retirement.

About Genworth

Genworth Financial, Inc. (NYSE: GNW) is a leading public Fortune 500 global financial security company. Genworth employs approximately 7,000 people in 25 countries. Its products and services help meet the investment, protection, retirement and lifestyle needs of over 15 million customers. Genworth operates through three segments: Retirement and Protection, International and U.S. Mortgage Insurance. Its products and services are offered through financial intermediaries, advisors, independent distributors and sales specialists. Genworth Financial, which traces its roots back to 1871, became a public company in 2004 and is headquartered in Richmond, Virginia. For more information, visit

SOURCE Genworth Financial, Inc.
CONTACT: Kirby Kriz of Genworth Financial, Inc., +1-804-662-2579,
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