New York Life Investments has launched the Guaranteed Interest Pension Account (GPA) to help corporate plans better manage their near-term liabilities.
GPA allows sponsors to structure a portion of their assets to mirror liability cash flows, as outlined in the funding model outlined by the Pension Protection Act of 2006 (PPA), New York Life said.
The PPA sets out three segments for liabilities based on duration and the corporate bond yield curve. The GPA solves for the "near-term" (0-five years) segment by providing sponsors an investment option that offers a guarantee of principal coupled with competitive yields.
GPA is a group annuity contract issued by the firm's parent company, New York Life Insurance Company. Contributions are invested in a diversified fixed income portfolio within New York Life's general account. The GPA features a declared interest crediting rate that resets every six months, allowing plan sponsors more visibility into and control over their pension plans.
"The PPA changed the investment dialogue for pension plans," said Steven Dorval, CFA, managing director and head of retirement investments at New York Life Investments. "Sponsors and advisors are focused on funding their liabilities. We are working with clients to help meet their liability needs within the three distinct liability segments defined by the PPA, as they consider a range of options, including moving toward a liability driven investment (LDI) model. GPA is a solid solution."
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