PLANSPONSOR Roadmap: Navigating the Retirement Income Landscape

Retirement income encompasses a broad array of nascent products, each with its own hurdle to adoption, according to panelists at the 2026 PLANSPONSOR Roadmap session, “Navigating the Retirement Income Landscape.”

During the second session of PLANSPONSOR’s Retirement Income Livestream Series, experts provided an overview of various retirement income structures, explained the primary trade-offs and discussed ways to overcome some of the main barriers to adoption.

Categories and Misconceptions

Kevin Crain, executive director of the Institutional Retirement Income Council, said there are three main categories of retirement income solutions: non-guaranteed, insurance-based guaranteed and hybrid.

Guaranteed solutions, which consist primarily of annuities, Crain said, provide retirement income that a participant cannot outlive.

Within the retirement income industry, there are three misconceptions about guaranteed income, according to Crain. The first misconception concerns terminology: While “guaranteed income” and “lifetime income” are sometimes referred to interchangeably, they can be different. A required minimum distribution could provide income across the rest of a participant’s lifetime, for instance, but that income is not guaranteed.

The second fallacy involves the use of the word “guarantee,” Crain said. Whether income is truly guaranteed depends on the insurer that makes the guarantee, including its viability. 

Crain said the final misconception is that if a participant purchases guaranteed income, the entire balance must be annuitized. Rather, partial balances can be annuitized.

Non-guaranteed solutions, which do not ensure that income will flow for a lifetime, also include systematic withdrawals and managed payout funds. Hybrid solutions include target-date funds with built-in annuities, as well as managed accounts with annuity features.

Another category distinction comes between “in-plan” and “out-of-plan” products, said Elizabeth Heffernan, head of partnerships and consulting strategy at Micruity. An “in-plan” solution, in Heffernan’s view, is simply any solution that is offered within the institutional defined contribution marketplace.

Evaluating Products

Like any investment product, retirement income solutions come with trade-offs, the panelists agreed.

Heffernan said one trade-off to a participant having guaranteed income is that they must pay fees for that guarantee. A product that has fees is not inherently wrong to have, but plan fiduciaries need to evaluate the costs of the products they choose to offer.

According to Heffernan, fiduciaries should also check whether transactions within their company’s plan trigger fees, as well as whether recordkeepers charge participants fees to process periodic or scheduled account withdrawals.

Crain added that plan sponsors should consider what the appropriate benchmarks are for comparing retirement income products. In the process of doing so, sponsors should evaluate the insurer backing the product, including its credit ratings.

Interest vs. Adoption

Tim Rouse, executive director of the SPARK [Society of Professional Asset Managers and Recordkeepers] Institute, said participants’ reported interest in retirement income products has not matched their adoption of available offerings.

“The decision [to] ‘not yet’ [adopt is] a rational decision for plan sponsors, participants and advisers,” Rouse said. “The consumer is not failing to buy products because they haven’t been pitched to them. …They [just] cannot tell what they are buying.”

Drew Maresca, vice president of research at the Defined Contribution Institutional Investment Association, said a DCIIA survey of 2,000 pre-retirees found that a lack of access to retirement income was participants’ primary hurdle to adoption. Only 22% of participants surveyed had access to in-plan products offering guaranteed lifetime income; however, of those with access, 59% reported investing in a guaranteed lifetime income product.

Another 29% of survey respondents said they were unsure about the availability of guaranteed lifetime income products in their plan, demonstrating that participants may have a lack of education and understanding of the products themselves, according to Maresca. Of participants who said they had access to guaranteed income products but chose not to invest in them, 61% said their main reason was not knowing enough about the product.

Heffernan said plan sponsors need to educate participants as much as possible about the retirement income options available to them, to help drive informed decisionmaking.

Maresca said the lack of education DCIIA found through its survey makes sense, given participants’ use of advice is lacking: Half of pre-retirees surveyed said they did not work with an adviser in any capacity, and only 13% reported working with a plan-offered adviser. Of those who invested in a product with guaranteed lifetime income, however, 69% said that in-person meetings with an adviser were made available to them.

Crain suggested that to effectively educate participants, plan sponsors should look over retirement income enrollment materials that are distributed to participants. It is important for plan sponsors to consider how concisely the information is communicated, he said, because it can be telling of how well participants will understand it.