Forum Explored Choices Affecting Retirement Income Adequacy

July 17, 2013 ( – A policy forum sponsored by the Employee Benefit Research Institute (EBRI) examined factors affecting retirement income adequacy and decisions that can mitigate their impact.

At the forum, “Decisions, Decisions: Choices That Affect Retirement Income Adequacy,” experts on U.S. retirement policy offered insights about topics such as the impacts of a sustained low-interest-rate environment on retirement savings and retirement income, the influences of the employer match in 401(k) plans, and suggestions about how to help plans and participants optimize their distribution choices—in particular rollover, drawdown and annuity options.

Findings presented at the policy forum included:

  • Roughly one-quarter of Baby Boomers and Gen-Xers, who would have had adequate retirement income under historical averages, would end up running short of money in retirement if today’s rates are assumed to be a permanent condition, although there is likely to be little impact from low bond rates on the lowest-income group.
  • The current interest rate environment, and its duration, has implications for defined contribution plans in term of the type(s) of fixed-income offerings on the menu, as well as stable-value and target-date funds.
  • The economic environment has had an impact on employer contributions to 401(k) plans—although among the minority of plan sponsors that suspended their matching contributions during the recent recession, many have restored them. Few employers have moved to less frequent matching cycles (such as annually), and the vast majority provide a 401(k) match coincident with their payroll cycle.
  • The level of the match seems to have an impact on contribution levels in voluntary-enrollment 401(k) plans, less so with automatic enrollment plan designs.
  • There doesn’t appear to be any linkage between adopting automatic enrollment and changes to the employer contribution level/timing.
  • The vast majority of defined benefit (pension) plan participants who were not forced to take an annuity chose to take a lump-sum distribution.
  • Plan design matters, both in term of the savings decisions participants make, and the decisions they make post-retirement.


Summaries of presentations are published in the July EBRI Notes online here.