June 5, 2012 (PLANSPONSOR.com) – Plan sponsors need to do more to help participants secure retirement income, according to a study by MetLife.
“Retirement Income Practices Study: Perspectives of Plan Sponsors and Recordkeepers for Qualified Plans," examines the dynamics of the plan sponsor-recordkeeper relationship, related to the provision of lifetime income options in qualified plans.
Both plan sponsors and recordkeepers agree that a focus on retirement income will be one of the biggest retirement practice trends to emerge in the near future. Ten of the 12 recordkeepers surveyed said an increasing focus on retirement income is among their top predictions for the next three to five years, and one-third of plan sponsors agree.
One way plan sponsors and recordkeepers can focus on retirement income is to provide participants with projections that show the monthly income they might receive during retirement. Currently, this information is not frequently shown online or on statements, according to the study. And plan participants are not finding out the information on their own—the majority of recordkeepers surveyed estimated that less than one-quarter (25%) of plan participants have projected their retirement income.
While plan participants are not making the effort to calculate their retirement income, they would like guaranteed income in retirement. Nearly half (44%) of plan sponsors said that the majority of their defined contribution (DC) plan participants would prefer to “receive at least part of their retirement savings as monthly income for as long as they live rather than receiving all of it in a lump sum that they would invest themselves.”