- Actuary: The individual who uses statistical mathematics to calculate the premiums, dividends, reserves, and pension, insurance and annuity rates for an insurance company.
- Annuitant: The individual who receives payments from an annuity under the terms of the annuity contract. The annuitant’s life expectancy, along with other factors, is used to determine the amount income payments to be made under the annuity contract. See also Second Annuitant.
- Annuity: Issued by an insurance company, individuals can use an annuity to save for retirement and receive lifetime income in retirement. Generally, while employed individuals make tax-deferred contributions to a retirement savings account and at retirement select a payout option(s) that meets their income needs. Once annuity payments begin, they are made on a periodic basis according to the terms of the annuity contract and generally continue for as long as the annuitant lives. See also Deferred Annuity; Fixed Annuity; Immediate Annuity; Variable Annuity.
- Annuitization: The process of converting an annuity contract's value into an income stream represented by periodic payments made over a specified period of time, commonly for life.
- Annuity Contract: A legal contract in which an insurer promises to make periodic payments to a designated individual over a specific period of time beginning on a set date in exchange for that individual's payment of premiums to the insurer.
- Annuity Payment Frequency: The length of time between income payments made under an annuity income plan; typically, annuitants can choose to receive monthly, quarterly, semiannual or annual payments.
- Basis Point: A unit of measure for interest rates where one basis point is equal to 1/100th of 1%, or 0.01%.
- Beneficiary: The individual(s), legal entity, estate or trust named by the annuitant to receive the benefits that remain upon the death of the annuitant, and second annuitant if applicable, prior to the end of an annuity guarantee period, typically a spouse or children. An annuitant may also be able to name contingent beneficiaries to receive payment in the event the primary beneficiaries are not living at the time benefits become due to them.
- Contingency Reserves: Insurance companies are required by law to set money aside to protect an individual’s guaranteed savings and income benefits. Unlike most insurance companies, TIAA seeks to provide unneeded profits back to individuals in support of their retirement in the way of additional interest and lifetime income. This return of contingency reserves, which is not guaranteed, is how TIAA can elect to share portions of its profits.
- Death Benefit: The annuity benefit paid to a second annuitant or designated beneficiary (primary or contingent) when the annuitant (annuity contract owner) dies.
- Default Option: Upon enrollment, an employee’s contributions are invested in a fund selected by the employer unless the employee selects select different investment options.
- Deferred Annuity: A type of annuity that delays income, installment or lump-sum payments until the annuity owner elects to receive them. This type of annuity has two main phases: the savings phase, which is when individuals invest money into the account, and the income phase, which is when the assets are converted into annuity payments, usually for life. These two phases are sometimes also called the accumulation phase and the decumulation phase. A deferred annuity can be variable or fixed. The TIAA Secure Income Account is a fixed deferred annuity.
- Expense Ratio: The expense ratio measures how much of a fund's assets are used for administrative and other operating expenses. An expense ratio is determined by dividing a fund's operating expenses by the average dollar value of its assets under management (AUM). Operating expenses reduce the fund's assets, thereby reducing the return to investors.
- Note: The TIAA Secure Income Account is a guaranteed insurance contract and does not include an explicit expense ratio like one might see on mutual funds.
- Financial Strength Ratings: A measure of the firm’s claims-paying ability. An insurance company credit rating is the opinion of an independent agency regarding the financial strength of an insurance company. An insurance company's credit rating indicates its ability to pay policyholders' claims.
- Note: For its stability, claims-paying ability and overall financial strength, Teachers Insurance and Annuity Association of America (TIAA) is a member of one of only three insurance groups in the United States to currently hold the highest rating available to U.S. insurers from three of the four leading insurance company rating agencies: A.M. Best (A++ as of 6/19), Fitch (AAA as of 5/19) and Standard & Poor's (AA+ as of 12/19), and the second highest possible rating from Moody’s Investors Service (Aa1 as of 8/19). There is no guarantee that current ratings will be maintained. The financial strength ratings represent a company’s ability to meet policyholders’ obligations and do not apply to variable annuities or any other product or service not fully backed by TIAA’s claims-paying ability. The ratings also do not apply to the safety or the performance of the variable accounts, which will fluctuate in value.
- Fixed Annuity: While you’re saving (making contributions into an account), earn a minimum guaranteed interest rate on your contributions and principal, and, depending on the fixed annuity, the potential for additional amounts of interest. When you retire, fixed annuities can offer income for life that will never fall below a certain guaranteed level and provide income that is guaranteed to last for a lifetime, similar to income that’s typically available from pension plans. The insurance company guarantees both interest earnings and principal.
- Guaranteed Minimum Interest Rate: The minimum interest rate an insurer will credit during an annuity contract's accumulation phase. Guarantees are based on the claims-paying ability of the issuing company.
- Guarantee Period: Annuitants can choose a guarantee period of 10, 15 or 20 years If the annuitant dies before the period ends, the beneficiaries will receive payments until the end of the guaranteed period according to the provisions of the contract. Usually individuals choose a guarantee period to ease concerns about passing away shortly after beginning lifetime income payments. Note: Electing a guarantee period affects the amount of the annuity payments.
- Immediate Annuity: A type of annuity that is designed to provide a guaranteed income stream, most typically for an individual or joint lifetime, with payments beginning in less than one year. It can also be structured to provide guaranteed income for a specified period of time.
- Income or Payout Options: The variety of ways the participant may receive income from the annuity, for example, lifetime income, full and partial lump sum withdrawals, etc.
- Interest Crediting Rate: The amount of interest credited on contributions and principal for a specified period. The interest crediting rate may be more than the guaranteed minimum interest rate.
- Life Annuity: An annuity that pays a set amount on a regular, periodic basis, for the duration of the annuitant's life, and the life of a Second Annuitant if so elected by the Annuitant at the time the lifetime income stream is purchased.
- Life Expectancy: The number of years an individual is expected to live from a certain point in time. Each insurer may have a different view of life expectancy.
- Liquidity: The ability to quickly convert assets into cash by an individual or organization without incurring significant losses of value.
- Loyalty Bonus: Long-term contributors to the TIAA Secure Income Account have the potential to receive more lifetime income and the potential for lifetime income payments to increase in retirement as a result of TIAA potentially sharing a portion of its profits. This loyalty bonus-like feature is a distinguishing characteristic of the TIAA Secure Income Account. TIAA may share profits with TIAA Secure Income Account owners through declared additional amounts of interest and through increases in annuity income throughout retirement. These additional amounts are not guaranteed.
- Mutual Fund: A type of financial vehicle made up of a pool of money collected from many investors to invest in securities such as stocks, bonds, money market instruments, and other assets.
- Payout Period: The period of time during which an annuitant is provided payments from an annuity.
- Principal: The collective total of contributions, rollovers and transfers made including accumulated earned interest.
- Qualified Joint and Survivor Annuity: If an individual is married and their plan is subject to ERISA, their spouse must receive at least 50% of their retirement income if they pass away before their spouse. The spouse can waive these rights by signing a special form in the presence of a notary.
- Qualified Lifetime Annuity Contract (QLAC): A deferred annuity funded with an investment from a qualified retirement plan or IRA. QLACs provide guaranteed monthly payments until death and are shielded from the downturns of the stock market.
- Recordkeeping Fee: An ongoing fee (e.g., monthly or annual) charged by the recordkeeper to cover management and administrative fees associated with the account.
- Second Annuitant: A person named by the annuitant to receive income payments if the annuitant pre-deceases the second annuitant. This person's age and life expectancy are used along with those of the contract owner and other factors to calculate the amount of annuity payments.
- Single Life Annuity: A type of annuity in which the periodic payments are made to the annuity contract owner for life but end after the owner dies.
- TIAA: TIAA (the Teachers Insurance and Annuity Association of America), a New York-domiciled life insurance company, was founded by Andrew Carnegie more than 100 years ago with the goal of providing retirement income to college educators.
- Note: Today, TIAA is a global, diversified financial services company with $1.1 trillion in assets under management (as of 12/31/19).1 With an award-winning2 track record for consistent investment performance, TIAA (TIAA.org) is the leading provider of financial services in the academic, research, medical, cultural and government fields. TIAA offers a wide range of financial solutions, including investing, banking, advice and education, and retirement services.
- TIAA Secure Income Account: Most retirement plans use target dates as their default, focusing on accumulating savings but not necessarily retirement income. Now, employers can build guaranteed growth and lifetime income into a plan’s default by adding TIAA’s institutionally priced, guaranteed savings and lifetime income product as an allocation within managed accounts or custom target-date model portfolios.
- Fully liquid to plan participants, it protects balances from losing value, guarantees growth over time and delivers dependable lifetime income. Participants can convert savings to monthly income they cannot outlive and get a “paycheck in retirement” for life when they stop working. Any guarantees under annuities issued by TIAA are subject to TIAA’s claims-paying ability. They also have an opportunity for additional amounts of interest and income the longer they contribute. Such amounts are not guaranteed at any time.
- It’s like adding a DB-style payout to a DC plan, without the complications and funding liabilities that come with a pension plan. The stability of TIAA, a Fortune 100 company, combined with the innovation of Nuveen, TIAA’s investment manager enable you to benefit from our competitive interest crediting rates, outstanding financial strength ratings and 100 years of paying lifetime retirement income.
- Two- Life Annuity: A type of annuity that continues to provide payments to another individual ( typically a spouse, partner or other loved one) after the death of the annuitant.
- Note: Married individuals can elect a number of options to continue payment to their spouse if they pass away before them. These include 100%, 75% or 50% to the spouse. You can also elect to pay two-thirds of the original payment to whoever survives.
- Variable Annuity: While individuals are saving (making contributions into an account), they can invest in a variety of asset classes; account values will fluctuate based on the performance of the investments in the accounts. It is possible to lose money in variable annuities. When individuals retire, variable annuities can provide an income stream that is guaranteed to last for life, but the actual amount will rise or fall based on investment performance. Unlike fixed annuities, funds in a variable annuity are subject to market risk.
- Vintage: Think of a vintage within the TIAA Secure Income Account as an interest rate “bucket.” Different portions of your account balance that are in different buckets may earn different interest rates. TIAA refers to these buckets as “vintages.” If an individual contributes regularly over time, they will likely have balances in several different buckets, and their amounts in these buckets may each be earning different interest rates. A participant’s balance by vintage is also a factor in the amount of lifetime income they can receive.
This section provides you with commonly used terms associated with
the TIAA Secure Income Account.
the TIAA Secure Income Account.
If you have questions or need additional information, please contact TIAA_DCIO_Support@tiaa.org. TIAA will be happy to help you.
1 Based on $1.1 trillion of assets under management across Nuveen Investments affiliates and TIAA investment management teams as of 12/31/19.
2 The Lipper Mixed-Assets Large Fund Award is given to the group with the lowest average decile ranking of three years’ Consistent Return for eligible funds over the three-year period ended 11/30/15 (against 39 fund families), 11/30/16 (36), 11/30/17 (35) and 11/30/18 (35). Note this award pertains to mixed-assets mutual funds within the TIAA-CREF group of mutual funds; other funds distributed by Nuveen Securities were not included. From Thomson Reuters Lipper Awards, © 2019 Thomson Reuters. All rights reserved. Used by permission and protected by the Copyright Laws of the United States. The printing, copying, redistribution, or retransmission of this Content without express written permission is prohibited. Certain funds have fee waivers in effect. Without such waivers ratings could be lower. Past performance does not guarantee future results. For current performance, rankings and prospectuses, please visit the Research and Performance section on TIAA.org. The investment advisory services, strategies and expertise of TIAA Investments, a division of Nuveen, are provided by Teachers Advisors, LLC and TIAA-CREF Investment Management, LLC. TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, distributes securities products.