Deferred‑comp committee pauses rollout of Nationwide’s “retirement income builder” pending further fiduciary review

The Deferred Compensation Advisory Committee reopened discussion of Nationwide’s Retirement Income Builder, a product designed to let participants ‘‘capture’’ their highest account balance and convert that high watermark into a lifetime income stream, but members deferred implementation pending additional fiduciary review.

Eric Linsky, identified in the meeting as a Nationwide product expert, described how the product works: participants begin capturing a “high watermark” quarterly starting at age 47; at retirement they may elect to receive income equal to 6% of that high watermark for life, and if an account later reaches zero the product’s insurance component would continue to pay 4.5% of the high watermark. "Starting at 65, they can elect to start to receive income, and they will receive 6% of that captured high watermark every year for the rest of their life," Linsky said, summarizing the design.

Vincent, from Fiduciary Consulting Group, described outstanding concerns from his analytical team about contractual language, guarantees and portability between record keepers. "We still have some concerns around due diligence, around guarantees," Vincent said. He and his analytical colleagues asked for clearer offering language and time to complete due diligence before the county commits to implementation.

Committee members and Nationwide staff discussed how the product is implemented operationally. Linsky explained that the insurance component is a fixed indexed annuity embedded in the allocation and that the underlying manager for the strategy is State Street. He said the structure was built so a trust company (GTC) holds the contracts and would, in a termination scenario, seek alternative insurers or work with remaining insurers to try to preserve lifetime income for participants. "In the event an alternative solution cannot be found, participants would receive the surrender value of the TDFs," Linsky said, describing the worst‑case scenario referenced in the offering materials.

Committee members asked whether other plans had adopted similar solutions and requested references. Nationwide named several plans (examples cited included DeKalb County, Ga.; Baltimore County, Md.; Dakota County, Minn.; City of Des Moines, Iowa; Lansing Board of Water and Light) that have added comparable solutions and said the feature has been in the marketplace for a few years.

The committee did not take a formal vote to adopt the product at this meeting. Several committee members expressed support for the concept but agreed with staff and consultant Vincent that more review of the offering documents and legal language is needed before final implementation. One committee member summarized the group’s position: proceed with additional review and counsel input rather than immediate implementation.

Next steps recorded in the meeting included continued discussions among Nationwide, Fiduciary Consulting Group, county staff and counsel to address contract language, portability protections and the analytical questions raised by the consulting team. The advisory committee previously voted to add the product at an earlier meeting, but committee members and staff emphasized that final administrative steps and legal clearance remain necessary before launching the option to participants.