Nationwide Indexed Principal Protection℠

Nationwide Indexed Principal Protection^SM

Nationwide Indexed Principal Protection^SM (NW-IPP) is a long-term savings option that protects your Plan participants’ principal. That means no matter what the market does, the account is protected and it retains the opportunity for upside potential.

What is NW-IPP?

NW-IPP is a group fixed indexed annuity for retirement plans that tracks the performance of the S&P 500® Daily Risk Control 5% Excess Return Index (“the Index”). Money is not directly invested in the Index, but its performance is used to credit the account with interest earnings, subject to a specific limit called a cap rate.

If the Index goes up, the account will be credited with interest earnings up to the cap rate. For example, if the Index gains 8% at the end of the Index Term and the cap rate is 7%, contributions to this account will be credited with 7% interest earnings.
If the Index goes down, the account loses nothing because the principal is protected.

NW-IPP can help provide confidence through unstable market conditions

Hypothetical assumptions: A $100,000 one-time contribution is allocated to Nationwide Indexed Principal Protection℠ with a 5-year book value payout term. This chart demonstrates historical performance of S&P 500® Daily Risk Control 5% Excess Return Index assuming a 7% cap and a 0% floor. This example assumes that the initial deposit on 10/1/2010 remains invested in NW-IPP for 10 years, and the cap remains the same over the illustrated 10 years. The cap and interest rate may be changed for each term. This illustration is not a projection or prediction of future performance. The performance could be significantly different than the investment performance shown and shouldn’t be considered a representation of performance or investor experience of the index(es) in the future. Withdrawals will reduce the contract value; this illustration does not demonstrate the impact of withdrawals.

Potential participant benefits of NW-IPP:

Principal investment protection from market declines
Growth potential when markets are increasing, subject to the cap rate
Gains are locked in and become part of the principal at Index Term renewal
Two contribution options: payroll deductions or a lump-sum dollar amount exchanged from another investment option in the Plan (no minimum required)
Plan participants can exchange their money out of this investment option, should they change their mind (restrictions may apply)
A simple web experience makes choosing this investment option easy

Two ways Plan participants can take advantage of NW-IPP

Case study 1: Exchange In

Maria, 55 years old, pre-retiree, wants to lock in gains

1. At any time, Maria can exchange any dollar amount from another investment option in her retirement plan.

2. Money allocated to NW-IPP goes into an Interest Account that earns daily interest until the end of the current quarter.

3. At the beginning of the next calendar quarter, money sitting in the Interest Account is swept into an Index Account for one year.

4. Interest earnings are credited to the Index Account at the end of the one-year Index Term and depend on the return of the Index, subject to the cap rate.

5. The one-year Index Term automatically renews with a new cap rate. Any interest earnings are locked in and the new principal amount is protected for the following year.

icon of interest plus principle earnings

* Principal + Interest earnings will become principal at the beginning of the next Index Term.

Case study 2: Payroll Deduction

Craig, 35 years old, fiscally conservative, wants ability to exchange out

1. Every pay cycle, money is deducted from Craig’s paycheck and contributed to his retirement plan account.

2. The money is then invested according to his allocations. Up to 100% of a portfolio can be allocated to NW-IPP.

3. Money allocated to NW-IPP goes into an Interest Account that earns daily interest until the end of the current quarter.

4. At the beginning of each quarter, money sitting in the Interest Account is swept into a new Index Account for one year. It’s possible to have up to four Index Accounts at any given time.

5. Interest earnings are credited to each Index Account at the end of the one-year Index Term and depend on the return of the Index, subject to the cap rate.

6. Each one-year Index Term automatically renews with a new cap rate. Any interest earnings are locked in and the new principal amount is protected for the following year.

* Principal + Interest earnings will become principal at the beginning of the next Index Term.

Important considerations

Funds must remain in each Index Account for the entire one-year Index Term in order to receive any interest earnings, which are credited at the end of the term
90-day equity wash provisions may apply, which could prevent Plan participants from exchanging directly into competing short-term investment options
Expenses are built into the investment option prior to index cap rates being declared, which means that there are no additional fees or penalties applied if Plan participants decide to exchange out of this investment option.
Fees associated with plan recordkeeping may still apply, and in some instances, result in a reduction in principal.

Additional resources

Participant brochure

Product profile

This material is not a recommendation to buy, sell, hold or roll over any assets, adopt an investment strategy, retain a specific investment manager or use a particular account type. It does not take into account the specific investment objectives, tax and financial condition, or particular needs of any specific person. Investors should discuss their specific situation with their financial professional.

The “S&P 500” is a product of S&P Dow Jones Indices LLC (“SPDJI”) and has been licensed for use by Nationwide Life Insurance Company (“Nationwide”). Standard & Poor’s®, S&P® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); DJIA®, The Dow®, Dow Jones® and Dow Jones Industrial Average® are trademarks of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Nationwide. The Nationwide Indexed Principal Protection℠ group fixed indexed annuity is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P or their respective affiliates, and none of such parties makes any representation regarding the advisability of investing in such product(s), nor do they have any liability for any errors, omissions or interruptions of the S&P 500.

Group fixed indexed annuities are not stock market investments and do not directly participate in any stock or equity investments. The index does not include dividends paid on the underlying stocks and therefore does not reflect the total return of the underlying stocks; neither a market index nor any fixed indexed annuity is comparable to a direct investment in the equity markets. When you purchase Nationwide Indexed Principal Protection, you are not directly investing in a market index. The actual return of the index account will be based on the performance of the underlying index. It is important to understand that actual returns may be less than the return of the index due to the index cap. Past index performance is not a guarantee of future performance. Group fixed indexed annuities are contracts purchased from a life insurance company. They are designed for long-term retirement goals. Withdrawals are subject to income tax, and withdrawals before age 59½ may be subject to a 10% early withdrawal federal tax penalty. Nationwide Indexed Principal Protection is a group fixed indexed annuity issued by Nationwide Life Insurance Company and held in the general account.

Guarantees are backed by the claims-paying ability of the issuing insurance company. Transfers out of this contract to other funding providers are subject to certain restrictions. Contact your plan sponsor for information regarding these restrictions.

Principal protection with the opportunity for growth