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Fidelity moves to bring pension-like income to 401(k) savers

The move is aimed at generating a reliable income in retirement

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Mark Huffman
Reporter

Mark Huffman has covered consumer issues since 2004, with a special focus on protecting and empowering older adults. A former news correspondent for the Associated Press Radio Network, Westwood One, and ConsumerAffairs, Mark brings decades of journalistic experience to RetirementLiving.com. He is passionate about giving consumers a voice and helping them make informed decisions. Mark has also created educational content, including Senior Scam Alert, a video resource designed to help seniors recognize and avoid fraud. He holds a B.A. from the University of Kentucky and lives with his family in Richmond, Virginia.

Updated:

key insights:

  • Fidelity plans to launch Fidelity Freedom Lifetime, a new suite of target-date collective investment trusts that includes an optional guaranteed lifetime income feature.
  • The product will combine Fidelity’s target-date investment strategy with income options backed by Nationwide and New York Life.
  • The retirement solution is expected to become available to employers and plan sponsors on Fidelity’s recordkeeping platform in early 2027.

Fidelity Investments is expanding its retirement lineup with a new target-date investment option designed to help workers turn part of their 401(k) savings into a predictable stream of income during retirement.

The company announced plans to launch Fidelity Freedom Lifetime, a suite of target-date collective investment trusts (CITs) that will give participants the option to convert a portion of their retirement savings into guaranteed lifetime income. The new offering will be available to employers and plan sponsors using Fidelity’s recordkeeping platform beginning in early 2027. 

The move reflects a growing effort by retirement providers to address one of the biggest challenges facing retirees: generating reliable income after leaving the workforce. While traditional pensions have largely disappeared from the private sector, financial firms are increasingly seeking ways to incorporate pension-like features into defined-contribution plans such as 401(k)s.

New options

Under the new program, Fidelity’s target-date funds will include exposure to an insurance pool supported by Nationwide and New York Life. Participants nearing retirement will have the option to convert part of their account balances into guaranteed lifetime income payments, helping provide a more predictable source of retirement cash flow. 

Fidelity said the Freedom Lifetime funds will build on the firm’s existing target-date strategy, which automatically adjusts asset allocations over time, becoming more conservative as retirement approaches. The new feature is intended to integrate lifetime income planning into that framework while keeping the experience relatively simple for both employers and participants. 

Molly Cunningham, head of Workplace Lifetime Financial Help at Fidelity, said employees increasingly want greater certainty about their retirement income, and that the company designed the product to maximize the value of guaranteed income while remaining easy to adopt. Fidelity said participants will also have access to educational resources, planning tools, and one-on-one support.

Similar offerings

The launch comes as more asset managers and retirement providers explore ways to embed annuities and other guaranteed-income products into workplace retirement plans. Vanguard, BlackRock, and other firms have recently introduced similar offerings as the industry looks for ways to help retirees manage longevity risk and avoid outliving their savings. 

Industry interest appears to be growing. According to reporting by PLANADVISER, more than 70% of plan sponsors surveyed said it was important for retirement plans to offer participants a way to guarantee at least some retirement income. 

For Fidelity, the new product represents a significant step toward bridging the gap between traditional pension plans and modern 401(k) programs, giving retirement savers another option for creating a steady income stream after they stop working.