Clients interested in guaranteed lifetime income? Great-West Life & Annuity Insurance Co. has developed such a product, in the form of a mutual fund, for the bank-affiliated broker-dealer market in response to growing investor demand for guaranteed income in retirement.

Dubbed Great-West SecureFoundation Smart Future, the new retirement product brings clients “the advantages of a familiar retail mutual fund investment along with the benefits of a lifetime income guarantee outside of the traditional variable annuity structure,” Chris Bergeon, vice president of Great-West’s Financial Institutions Markets, said in a statement.

The structure of the product is relatively new in the marketplace and not widely available, Bergeon explained in a telephone interview. It’s a new product category for serving the retirement needs of investors, he said. 

The product consists of a mutual fund that invests in low-cost ETFs that track major market indexes (called Maxim SecureFoundation Balanced ETF Portfolio) and a guarantee of lifetime income backed by the financial strength of Great-West. Investors are guaranteed income payments of at least 4% of what the company calls the “benefit base” or value of their mutual fund once they begin to draw down on their investment. The guaranteed annual withdrawal rate, which is based on the 10-year Treasury yield and therefore fluctuates, is capped at 8%, said Bergeon.

The benefit base is reset each year, Bergeon explained. If the value of the assets in the mutual fund — or its fund value — increases from the previous year, the benefit base is increased.  If the fund value falls, the benefit base remains the same.  This way investors have the opportunity to “enjoy gains the market might make,” while protecting them from downdrafts, said Bergeon.

“Our retirement income offering delivers an innovative solution that advisors can readily recommend to clients who are looking for saving opportunities that ensure they’ll have guaranteed income throughout their retirement,” Jacques Brousseau, national director of retirement income products for Great-West’s Individual Markets Division, said in a statement.