Three years ago, $4 billion Hallmark Co. was struggling with a decision that it saw as financially necessary, but morally difficult. The 97-year-old privately owned greeting card manufacturer, which is still run by the grandsons of its founder Joyce C. Hall, was being forced to freeze its 62-year-old traditional defined benefit (DB) plan and replace it with a cash balance plan. Payments would be made into that fund until January 2010, and then those too would end. Like other companies propelled down this road by the increasing volatility of pension assets and liabilities–IBM Corp. becoming the poster company of otherwise good employers pulling the plug on traditional DB–Hallmark started out by sweetening its 401(k) plan match in January 2006–the date of the freeze and switch to the cash balance plan. It promised to sweeten it again–this time to a 60% match on 5%–in 2010 when it was scheduled to suspend pay credits. Hallmark also supplements the 401(k) with profit sharing between 5% and 10% annually on employee salaries.

But that didn't feel like enough to Hallmark or to Doug Judd, the investment manager for Hallmark's DC, DB and senior management retirement plans. While the company did as much as it could to protect the employees' 401(k) holdings by providing portfolio management tools, Hallmark knew that what it took away with the DB plan was the steady stream of income over the lifetimes of its employees, and what it needed to replace it with was some kind of road map that would help its former workers make it through retirement. So, Judd was assigned to look for options to help Hallmark's employees–not with how to build the nest egg, but how fast to spend it. "You retire with a lump sum, say a million dollars–but this is not your father's million dollars," says Judd. "How do you make the money last? Because if you follow the actuarial tables, then you could live another 20 or 30 years."

The quest led Judd to MassMutual and a new product category, the retirement management account. An RMA is an income planning and administration program that allows a person to assess his or her needs in retirement. It then provides a guide to making savings last through those leisure years. In the RMA model, a plan is devised that will give the person a steady stream of income during those years, but since few can say for sure how many years that will be–insurers coming closest with their actuarial models–the program involves a combination of products including equities, fixed income and, probably the most critical element, an annuity. "The RMA is like a personal pension plan tailored to the specific and changing needs of the retired employee," says J. Spencer Williams, senior vice president of MassMutual Income Group. Unfortunately, at this time, MassMutual doesn't offer this as an institutional product to be used within an active 401(k). But in the RMA, Judd saw the seeds of what companies will ultimately need to be providing their workers. "The idea that they're bundling together in one package the financial consulting, along with the annuities and the modeling, to figure out how much you can take out of the account is something that could be appealing," he says.

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