Methods and systems for providing and maintaining retirement income

Abstract

Methods and systems for the provision of a targeted risk-protected minimum income benefit or protected distribution through the design and management of a trust that allows for exposure to the equity and fixed-income markets. The targeted minimum income amounts depend upon the performance of equity and fixed income assets and risk mitigation instruments contained in the Trust. The method and system rely upon the adjustment of constituent assets to provide for the targeted minimum retirement income amounts. The action of risk management procedures eliminate reliance upon third-party guarantors. The methods and systems include mortality management procedures that protect the participants against longevity risk.

What is claimed is: 
     
         1 . A method for managing risk associated with offering a financial product that provides minimum benefit payments to a customer, where the customer invests in and owns an income protection fund or account (IPA) including hedges to manage risk associated with the minimum benefit payments, the method comprising:
 a. establishing the minimum benefit payments to be provided to the customer by a guarantor, the guarantor having a hedge portfolio;   b. using capital market inputs and variables to calculate a minimum benefit claim fair value and at least one minimum benefit claim hedge ratio based on the minimum benefit payment; and   c. rebalancing the guarantor's hedge portfolio to reflect the IPA, if desired.   
     
     
         2 . The method of  claim 1 , wherein the minimum benefit payment is a function of performance of customer-owned funds. 
     
     
         3 . The method of  claim 1 , wherein IPA hedges includes rebalancing one or more of index futures and index options. 
     
     
         4 . The method of  claim 1 , wherein IPA hedges includes dynamic rebalancing between equity and fixed income instruments. 
     
     
         5 . The method of  claim 1 , wherein in the initial minimum benefit payments are funded by customer-owned funds then, if the customer-owned funds are depleted, provided for by the guarantor. 
     
     
         6 . The method of  claim 1 , further comprising repeating steps a through c. 
     
     
         7 . The method of  claim 1 , wherein the IPA is held within a separate customer-owned fund or account. 
     
     
         8 . The method of  claim 1 , wherein the IPA has an allocation and the allocation can be rebalanced as a percent of other customer-owned funds. 
     
     
         9 . The method of  claim 1 , wherein the minimum benefit payment is a function of a referenced fund or index. 
     
     
         10 . A non-transient computer program product, having a computer readable program code embodied therein, said computer readable program code adapted to be executed by one or more computer processors to implement a method for managing a trust comprising an income protection account (IPA) having an asset set to hedge risk associated with providing a protected distribution amount to participants, the computer readable program code comprising:
 a. a data collection module, for causing the computer processors to collect data for at least economic scenario generation;   b. a valuation module, for causing the computer processors to calculate an IPA claim fair value and to calculate at least one IPA hedge ratio;   c. a computational module for determining dynamic adjustments to the IPA, including algorithms that adjust the IPA in response to at least one risk sensitivity value calculated by the valuation module, and wherein the protected distribution amount is adjusted if the IPA claim fair value differs more than a threshold amount, and if the protected distribution amount is adjusted, recalculating at least one risk sensitivity to reflect the adjusted protected distribution amount, and rebalancing the IPA to reflect the recalculated risk sensitivity.