DIETRICH Talks Annuity Payout Features

With ADQ, the firm’s newest feature, plan sponsors can help employees manage financial risks throughout a lengthier retirement cycle.

A webinar hosted by DIETRICH discussed the demand behind guaranteed income features in defined contribution (DC) plans, and how plan sponsors can offer latest tools to their participants.

“We really see that plans need to start offering easy access for the employees of the plan and help them manage those risks,” says Mark Doloughty, senior client relationship account manager at DIETRICH. “The way to do that is looking at single premium annuity payout features within the plan or options coming out of the plan.”

Ahead of potential passage of the SECURE Act, DIETRICH had announced its new DC retirement income annuity practice, ANNUA, back in June. During the recent webcast, the firm spoke about how incorporating a guaranteed lifetime income option for participants allows employees to manage financial risks throughout a lengthier retirement cycle, given the rise of longevity risk.

“The SECURE Act has put this idea at the forefront, explains Doloughty. “If it goes through, it’s going to be mandated that participants will see what their balance equals per month or year, and they’re going to want to know how they can get that.”

The firm noted a disconnect among plan sponsors, administrators and plan advisers who lack a large working relationship with annuity providers. With ADQ, the firm’s newest feature, plan sponsors can receive instant quotes from highly rated companies. Other offerings include institutional pricing, retirement account balance models and customizable integration.

In order to utilize ANNUA and its features, employers will need to input whether their plan identifies as qualified or nonqualified, whether it is a defined benefit (DB) or DC plan, the general demographic of the participant population, and whether certain participants are adding a spouse or survivor. Upon entering this information to DIETRICH’s system, employers should receive quotes from options in the marketplace, according to Doloughty.

“From there, we have a monthly benefit number, who the provider is, the annuity form, the guaranteed period and then the quote amount. We provide you an initial look from the marketplace with all this information,” he adds.

And while applying lifetime-income products such as annuities can be helpful to preserving retirement income, Doloughty concluded the webinar by stating the importance of maximization.  

“Participants have to look at what their preferences are. Are they looking at protecting longevity?” he asks. “So the annuity is a tool inside of this. In this case, the participant looks at their preference and says they’d like to have a piece disconnected. An ADQ could be the bridge to that.”