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Advisory committee pauses rollout of Retirement Income Builder amid fiduciary concerns
Summary
After consultants warned the product may lack durable participant guarantees and could be hard to port between recordkeepers, the San Joaquin County Deferred Compensation Advisory Committee voted unanimously to monitor the Retirement Income Builder for one year rather than proceed with implementation or broad employee outreach.
The San Joaquin County Deferred Compensation Advisory Committee voted Feb. 26 to pause broad implementation of a retirement income product known as Retirement Income Builder and directed staff and consultants to monitor the product for one year.
Tom Bridal, director of investments at the Fiduciary Consulting Group, told the committee his review of contract documents raised “fundamental concerns” about long‑term stability. He said participants are not beneficiaries of individual annuity contracts and noted the contract structure places guarantees at the trust or insurer level rather than with an individual contract that might carry state guarantee protections. Bridal said language in the paperwork also permits insurers to suspend or discontinue payments if certain conditions are not met, a feature he said could create multi‑decade risk for retirees.
Vincent Galindo, a consultant with the Fiduciary Consulting Group, summarized the committee’s position: the product had previously been approved for consideration but implementation was halted while consultants and staff evaluated legal and operational questions. Galindo and other consultants emphasized that the committee’s fiduciary duty is to participants’ long‑term security.
Eric Linsky of Nationwide, who participated on the call, said the product’s design was intended to avoid mandatory annuitization and that a trustee (Global Trust Company) is charged with oversighting the product on behalf of participants. “Because you do not have to annuitize, participants can leave assets in plan and still access lifetime income,” Linsky said, adding that the trustee is legally required to look out for participants’ interests.
Committee members repeatedly pressed on portability and guarantee issues. One member asked whether anyone has yet taken distributions under the product; consultants and Nationwide said the product has not yet been in market long enough for distributions and that the first eligible participants will be able to take payouts in roughly two years.
A motion to “monitor the product and revisit it in a year” passed by voice vote with unanimous support. The committee’s vote means staff will not ask Nationwide to begin broad implementation or employee communications until outstanding legal and portability concerns are resolved and additional operational data are available.
Next steps: staff will continue dialog with Nationwide and the fiduciary consultants and return with updated analysis and any contract clarifications at a future meeting.
