Traditional Lifetime Annuity Income Steady for 2012

In 2012, participants who receive lifetime annuity income from TIAA Traditional will receive at least as much total income (guaranteed income plus additional amounts) as in 2011. Moreover, for the third year in a row, the TIAA Board of Trustees has voted to maintain or modestly increase income levels, despite a low interest rate environment in the United States.1

In this volatile period from 2008 – 2011, where TIAA Traditional income rates have been consistent, interest rates have continued to fall, impacting other types of fixed-income based investment options. For example, during this three-year period from 1/2/08 – 10/31/11, interest rates on average 5-year CDs have fallen to 2.12% from 4.35%, according to FactSet/ICAP. In addition, 10-year Treasury bonds have seen their yields drop to 2.07% from 3.94% over the three-year period, according to the Federal Reserve.

Board’s Decision Reflects Strong Capital Position
The TIAA Board of Trustees’ decision reflects the strong capital position of the General Account, which supports the TIAA Traditional guaranteed fixed annuity. Although participants in the TIAA Traditional Annuity do not invest in the General Account portfolio, the investment performance of that portfolio supports the annuity’s minimum guaranteed returns, additional amounts and payout obligations. TIAA’s General Account is the source of the earnings, financial strength and stability that back the TIAA Traditional Annuity.

Below are details for those receiving income from the TIAA Traditional lifetime annuity:

If you’re receiving income from the standard payment method, your monthly payments will remain unchanged in 2012.

If you’re receiving income from the graded payment method, your income will increase at about the same rate in 2012 as in 2011. These increases will vary by individual and average 2.85%.

The Principal and Interest rate, which is applicable to beneficiaries who want to receive interest only from TIAA Traditional, for 2012 is 3%, the same rate as in 2011.

Stabilizing Income
Launched with the founding of TIAA in 1918, the TIAA Traditional Annuity is a guaranteed fixed annuity. TIAA Traditional helps to stabilize the income of annuitants through the guaranteed monthly income it provides. Participants may also receive additional amounts, which are determined annually by the Trustees of TIAA and are not guaranteed for future years. Each December, the Board of Trustees of TIAA sets the rates that determine income levels for the following calendar year.

Other income changes are as follows:

Interest-Only income or Transfer Payout Annuity income: We’ll notify you in March 2012 of any payment changes taking effect April 1, 2012.

CREF or TIAA Real Estate variable annuity accounts: Your income may change annually or monthly.
If annually, we’ll notify you in April 2012 (changes based on account performance through March 30, 2012 and taking effect May 1, 2012). If monthly, we’ll notify you of the change each month.

Participants who have annuitized should consult the Outreach newsletter, which is available here (PDF).

All guarantees are based on the claims-paying ability of TIAA.

Annuity products are issued by TIAA (Teachers Insurance and Annuity Association), New York, NY.

1. This information doesn’t apply to income you’re receiving under defined benefit pension plans, principal and interest contracts, the TIAA Transfer Payout Annuity or interest-only payments from TIAA Traditional Annuity.



© 2014 and prior years, Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), New York, NY 10017