BlackRock clumsily reverse-engineers retirement

BlackRock unveiled a framework allowing employers to tailor target-date funds to their workforces, with choices including index-based or actively managed strategies and whole-portfolio approaches. Its LifePath Paycheck option lets workers use some savings to buy an annuity at retirement.

The framework would let employees use part of their account balance to buy lifetime income while keeping the rest invested elsewhere. The article argues that annuities can protect against outliving savings, but questions whether private assets are a good fit for individual retirement accounts, noting that the Cambridge Associates Private Equity Index returned around 9% annually after fees over the five years through March, versus 12% for the S&P 500.

The article says pension-like regularity at low cost could improve on conventional 401(k) plans, but argues that asking workers to navigate more investment choices may undermine the simplicity they need in retirement.