System and method for imbedding a defined benefit in a defined contribution plan

• US 20060085338A1
• Filed: 09/30/2005
• Published: 04/20/2006
• Est. Priority Date: 06/08/2001
• Status: Active Grant

• Current Assignee: Genworth Holdings, Inc. (Genworth Financial Incorporated)
• Original Assignee: Genworth Financial Incorporated
• Inventors: Atkinson, Landis William III, Sharpe, Matthew, Stiff, Geoffrey
• Granted Patent: US 8,024,248 B2
• Time in Patent Office: Days
• US Class Current: 705/40
• CPC Class Codes: G06Q 20/102 Bill distribution or payments
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A system and method for providing a user with a portable benefit, within a qualified or non-qualified defined contribution plan, based on a formula the result of which indicates the exact guaranteed minimum periodic income that the user will receive no matter how long the user lives and the potential for an increase in the periodic income based on excess investment performance over the formula of the designated defined benefit investment options is disclosed. The system comprises a defined contribution module for periodically receiving at least one of a sponsor contribution and a participant contribution and for accumulating value over a period of time by investing at least one of the sponsor contribution and the participant contribution or any portion(s) thereof in any number of select investment options, the accumulated value, or any portion(s) thereof, being capable of: (1) being withdrawn at any time and reinvested in any other select investment options, and (2) being paid out after a predetermined period of time; and wherein the select investment options comprises any number of investment products and at least one designated defined benefit investment option module for: (1) receiving at least one investment payment from the defined contribution module, the investment payment comprising at least one of the sponsor contribution, the participant contribution, and/or the accumulated value, or any portion(s) thereof, (2) for paying out a guaranteed minimum income payment for life after the predetermined period of time, the guaranteed minimum income payment being based on a retirement income formula, and (3) increasing the income payment for life for excess performance over the formula of the designated defined investment option.

Claims

1. A system for providing a user with a defined benefit within a qualified or non-qualified defined contribution plan, based on a factor that indicates the exact guaranteed minimum periodic income that the user will receive no matter how long the user lives and the potential for an increase in the periodic income based on excess investment performance over the formula of the designated defined benefit investment options, comprising:

a defined contribution module for periodically receiving at least one of a sponsor contribution and a participant contribution and for accumulating value over a period of time by investing at least one of the sponsor contribution and the participant contribution or any portion(s) thereof in any number of select investment option(s), the accumulated value, or any portion(s) thereof, being capable of;

(1) being withdrawn at any time, or (2) being paid out after a predetermined period of time; and

wherein the selected investment options comprise any number of investment products and at least one designated defined benefit investment option module for;

(1) receiving at least one investment payment from the defined contribution module, the investment payment comprising at least one of the sponsor contribution, the participant contribution, and/or the accumulated value, or any portion(s) thereof, (2) for paying out a guaranteed minimum income payment after the accumulation period of time, the guaranteed minimum income payment being based on a retirement income factor, and (3) increasing the income payment for life for excess performance over the factor of the designated defined benefit investment option.

2. The system of claim 1 wherein the retirement income factor is based on at least one of a savings commencement date, payout plan selected, product features and expenses, economic cycle, participant'"'"'s age, gender, retirement date, and marital status.

3. The system of claim 1 wherein the defined contribution plan comprises a qualified or non-qualified plan and a variable annuity investment product.

4. The system of claim 1 wherein the select investment options further comprises at least one mutual fund.

5. The system of claim 1 wherein the select investment options further comprises at least one other financial product.

6. The system of claim 1 wherein paying out accumulated value after a period of time comprises at least one of a lump sum payment, periodic payments and annuity payouts.

7. The system of claim 1 wherein the payment of the guaranteed minimum income payment after a predetermined period of time is further conditioned on a predetermined pattern of continued contributions by at least one of the sponsor and the participant.

8. The system of claim 1 wherein the investment payment to the designated defined benefit investment option is determined by either the participant, the sponsor, or both.

9. The system of claim 1 wherein the guaranteed minimum income payment to the designated defined benefit investment option comprises the product of the at least one investment payment, or any portion(s) thereof, and the retirement income factor.

10. The system of claim 1 wherein the guaranteed minimum income payment comprises a formula of the accumulated value, or any portion(s) thereof, and the associated retirement income factor(s).

11. The system of claim 1 wherein the reinvestment of the guaranteed minimum income payment is determined by the participant.

12. A method for guaranteeing a minimum income payment, comprising:

receiving at least one contribution from at least one of a sponsor and participant; and

investing the at least one contribution, or any portion thereof, into any number of investment options selected by the participant, the selected investment options comprising at least one defined benefit account that accumulates value and guarantees the participant a guaranteed minimum income payment which may be paid out any time after a predetermined period of time and which is capable of, in whole or in part, being withdrawn or reinvested into any number of the investment options any time prior to pay out, the guaranteed minimum income payment based on at least a retirement income factor.

13. The method of claim 12 further comprising the step of reinvesting the accumulated value or the guaranteed minimum income payment as determined by the participant.

14. The method of claim 12 further comprising the step of paying out the guaranteed minimum income payment after a predetermined period of time.

15. The method of claim 12 further comprising the step of withdrawing the accumulated value prior to a predetermined period of time as determined by the participant.

16. The method of claim 12 wherein the predetermined period of time comprises a retirement date.

17. The method of claim 12 further comprising paying out the guaranteed minimum income payment as a lump sum payment, periodic payments and/or annuity payouts.

18. The method of claim 12 wherein the at least one contribution from at least one of a sponsor and participant is received by a defined contribution module.

19. The method of claim 18 wherein the defined contribution module is associated with at least one of a 401(k) plan and a variable annuity product.

20. The method of claim 12 further comprising the step of investing in a second defined benefit account.

21. The method of claim 20 wherein investment in the second defined benefit account takes place after investment in the at least one defined benefit account.

22. The method of claim 12 wherein account value, or any portion(s) thereof, is capable of being reinvested in any of the select investment options at any time prior to payout.

23. A system for providing a user with a defined benefit, within a qualified or non-qualified defined contribution plan, comprising:

a savings module for receiving at least one investment payment, the investment payment comprising at least one of a sponsor contribution or a user contribution;

a benefit component which provides a minimum income guarantee to be available at a future date where the minimum income guarantee is derived from a formula; and

an accumulation component for delivering to the user the market performance of an investment vehicle during an accumulation phase, and for providing the potential for increases in future income above the minimum income guarantee based on market performance of the investment vehicle both during an accumulation and a payout phase.

24. The system of claim 23 wherein the formula comprises a retirement income factor based on at least one of a contribution date, contribution commencement date, payout plan selected, mortality factors, interest rate that varies with the number of years from the benefit product-determined user'"'"'s age to a specified income start age, product features and expenses, economic cycle, user'"'"'s age, gender, retirement date, and marital status.

25. The system of claim 23 wherein the savings module comprises a variable annuity.

26. The system of claim 23 wherein the savings module comprises a mutual fund with an insurance guarantee.

27. The system of claim 23 wherein payment of the guaranteed minimum income payment occurs on or after a predetermined period of time and is conditioned on a predetermined pattern of continued contributions by at least one of the sponsor and the user.

28. The system of claim 23 wherein payment of the guaranteed minimum income payment occurs on or after a future date and is not conditioned on any specific pattern of contributions by at least one of the sponsor and the user.

29. The system of claim 23 wherein paying out accumulated value, in whole or in part, occurs any time prior to annuitization and any such payout will result in a reduction of the guaranteed minimum income payment.

30. The system of claim 23 wherein the guaranteed minimum income payment is only available on or after a specified future date that varies by user.

31. The system of claim 23 wherein the contribution to the savings module is determined by the user, the sponsor, or both.

32. The system of claim 23 wherein the guaranteed minimum income payment formula is determined by the product of at least one investment payment to the designated savings module, or any portion(s) thereof, and an associated retirement income factor.

33. The system of claim 23 wherein the guaranteed minimum income payment comprises the product of the accumulated value, or any portion(s) thereof, and an associated retirement income factor.

34. The system of claim 23 wherein the guaranteed minimum income payment comprises the sum of the product of each contribution, or any portion(s) thereof, and associated retirement income factors.

35. A system of claim 23 wherein the guaranteed minimum income amount that the user has accumulated is retained when there is a rollover of the savings module balance to a different instance of the savings module.

36. The system of claim 23 wherein the at least one contribution from at least one of a sponsor and participant is received by a defined contribution module.

37. The system of claim 23 further comprising an investment module for investing in a second defined benefit account.

38. The system of claim 23 wherein investment in the second defined benefit account takes place after investment in the at least one defined benefit account.

39. A method for providing a user with a defined benefit, within a qualified or non-qualified defined contribution plan, comprising:

receiving, via a savings module, at least one investment payment, the investment payment comprising at least one of a sponsor contribution or a user contribution;

providing, via a benefit component, a minimum income guarantee to be available at a future date where the minimum income guarantee is derived from a formula; and

delivering to the user, via an accumulation component, the market performance of an investment vehicle during an accumulation phase, and for providing the potential for increases in future income above the minimum income guarantee based on market performance of the investment vehicle both during an accumulation and a payout phase.

40. The method of claim 39 wherein the formula comprises a retirement income factor based on at least one of a contribution date, contribution commencement date, payout plan selected, mortality factors, interest rate that varies with the number of years from the benefit product-determined user'"'"'s age to a specified income start age, product features and expenses, economic cycle, user'"'"'s age, gender, retirement date, and marital status.

41. The method of claim 39 wherein the savings module comprises a variable annuity.

42. The method of claim 39 wherein the savings module comprises a mutual fund with an insurance guarantee.

43. The method of claim 39 wherein payment of the guaranteed minimum income payment is available at a future date and is conditioned on a predetermined pattern of continued contributions by at least one of the sponsor and the user.

44. The method of claim 39 wherein payment of the guaranteed minimum income payment is available at a future date and is not conditioned on any specific pattern of contributions by at least one of the sponsor and the user.

45. The method of claim 39 wherein paying out accumulated value, in whole or in part, occurs any time prior to annuitization and any such payout will result in a reduction of the guaranteed minimum income payment.

46. The method of claim 39 wherein the guaranteed minimum income payment is only available on or after a specified future date that varies by user.

47. The method of claim 39 wherein the contribution to the savings module is determined by the user, the sponsor, or both.

48. The method of claim 39 wherein the guaranteed minimum income payment formula is determined by the product of at least one investment payment to the designated savings module, or any portion(s) thereof, and an associated retirement income factor.

49. The method of claim 39 wherein the guaranteed minimum income payment comprises the product of the accumulated value, or any portion(s) thereof, and an associated retirement income factor.

50. The method of claim 39 wherein the guaranteed minimum income payment comprises the sum of the product of each contribution, or any portion(s) thereof, and associated retirement income factors.

51. A method of claim 39 wherein the guaranteed minimum income amount that the user has accumulated is retained when there is a rollover of the savings module balance to a different instance of the savings module.

52. The method of claim 39 wherein the at least one contribution from at least one of a sponsor and participant is received by a defined contribution module.

53. The method of claim 39 further comprising the step of investing in a second defined benefit account.

54. The method of claim 53 wherein investment in the second defined benefit account takes place after investment in the at least one defined benefit account.