lifetime income
non-qualified solutions
the power of
LINQS+
A proprietary innovation to the traditional SERP product.
With Lifetime Income Non-Qualified Solution (LINQS+), the organization purchases an insurance company guarantee to make the lifetime benefit payments. The Insurance Company takes the longevity, investment, and interest rate risk. The organization then carries the asset as an investment on the balance sheet and earns interest at the current market rates.
This proprietary innovation to the traditional supplemental executive retirement plan (SERP) combines the best of a traditional SERP with a mechanism to enhance executive retention and reduce the cost of the benefits.
EXAMPLE:
- An individual is to receive $100K annually for 15 years under a traditional SERP; the cost of the plan is $1,500,000 (100K x 15).
- With LINQS+, an investment of $800K will provide a GUARANTEED lifetime benefit stream of the same $100K annually.
- The financial impact is a positive savings of $700K for the organization, and the individual receives an enhanced LIFETIME benefit, which would equal $2,100,000 based on expected mortality.
HOW IS THIS DIFFERENT FROM BOLI/COLI?
LINQS+ is NOT life insurance. However, if properly structured, LINQS+ and BOLI/COLI complement one another. BOLI/COLI policies provide earnings to offset the cost of the benefit plans and protect against premature death through the insurance aspect of the policy.
LINQS+ protects individuals and organizations from longevity risk. As described above, LINQS+ actually reduces the cost of the benefits with the actual design specifically addressing the liability expense.
LINQS+ Commonly Asked Questions
The insurance company makes payments to the organization, who is the owner of the annuity. Then the company uses these payments to pay the participant their LINQS+ benefits.
The genesis of LINQS+ resulted from two things: Employees living longer, and The Great Recession. LINQS+ addresses increasing life expectancy by guaranteeing a lifetime benefit, and it addresses investment risk by guaranteeing the amount of the benefit. The guarantees are provided through a fixed annuity.
The organization purchases a fixed annuity from an insurance company that guarantees to provide a benefit stream. According to GAAP the company is allowed to expense the cost of providing the guarantee, which is the cost of the annuity, and not the actual cost of the benefit payments.
- Less expensive
- Lifetime Benefit – you cannot outlive this benefit
- Guaranteed payment, not contingent upon investment performance
Upon approval, it is typically less than 30 days.
First and foremost, the participant’s value to the institution is realized. In addition, the participant now has a lifetime benefit that is guaranteed, and will not have to worry about outliving their retirement.
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