October 5, 2017—Guaranteed Insurance Contracts, or GICs, are marketed as a reliable – even simple – company retirement plan investment vehicle. In my experience, however, employers whose 401(k) or 403(b) plans include GICs and their participants could benefit from carefully examining the GICs inner workings as they consider the best option to build toward a secure retirement.
My initial sit-down with employers who include a GIC in their company retirement plan offers a good occasion to “pop the hood” of their plan. Frequently I hear that their employees like the GIC because it “guarantees” a rate of return, they are protected from potentially negative investment returns, and – in most cases – there are no “fees” associated with their selection of the GIC. So, I find it helpful to examine with them some of the gears and levers that make a Guaranteed Insurance Contract tick.