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Reddy said he sees plan sponsors make statements like, “well, I don’t want to be first,” “no one’s asking me for it,” and “I’m not sure what my liability is in the future if I do have it.” Chepenik echoed their legal concern. “It’s a litigious society,” he told PLANSPONSOR. “Especially the 401(k) world today there’s much more focus on not making a mistake, and if you follow the past, it’s harder to make a mistake. If you do your own thing, you get called out for it.” Another setback to retirement income options are the challenges for recordkeepers, who need to adapt their systems to store information like a participant’s age and contribution flow, data they do not need for mutual fund recordkeeping, Reddy said. But recordkeepers do not have to retool their systems to accommodate the additional information needs alone. Companies such as DST Systems, Inc. and SunGard offer middleware that attaches to a recordkeeper’s software and helps them implement the income option, Chepenik noted.Despite the perceived setbacks some companies are starting to offer these options. Last month, United Technologies Corporation announced is now offering Lifetime Income Fund as its default investment option (see “Default Investment Option Addresses Longevity Risk”).
Reddy said he sees plan sponsors make statements like, “well, I don’t want to be first,” “no one’s asking me for it,” and “I’m not sure what my liability is in the future if I do have it.”
Chepenik echoed their legal concern. “It’s a litigious society,” he told PLANSPONSOR. “Especially the 401(k) world today there’s much more focus on not making a mistake, and if you follow the past, it’s harder to make a mistake. If you do your own thing, you get called out for it.”
Another setback to retirement income options are the challenges for recordkeepers, who need to adapt their systems to store information like a participant’s age and contribution flow, data they do not need for mutual fund recordkeeping, Reddy said.
But recordkeepers do not have to retool their systems to accommodate the additional information needs alone. Companies such as DST Systems, Inc. and SunGard offer middleware that attaches to a recordkeeper’s software and helps them implement the income option, Chepenik noted.
Despite the perceived setbacks some companies are starting to offer these options. Last month, United Technologies Corporation announced is now offering Lifetime Income Fund as its default investment option (see “Default Investment Option Addresses Longevity Risk”).