Participants Could Accept 'Mortality-Contingent' Products

May 12, 2009 ( - A new study by a Hartford-based retirement services firm asserted that service providers looking to help participants get ready for retirement should concentrate on improving investor education and providing mortality-contingent products.

A news release from String Financial, LLC about its recent study claimed 30% of participants surveyed would definitely or likely be willing to trade the ability to have a portion of their portfolio set up to go to their heirs on their death if such a trade meant they could generate more lifetime income than would be possible otherwise. Some 40% said they possibly would consider such a move.

String said it also found c urrent investor education efforts are coming up short, with participants’ asserting that educational materials are:

  • difficult to understand:34% of respondents felt the materials included concepts that were not adequately explained.
  • commodity product:41% of respondents agreed that the materials do not contain information that could not be easily found elsewhere (19% disagreed).
  • Only 18% of respondents indicated that the educational resources led to changes in retirement planning behaviors or practices.

With those feelings expressed by participants, not surprisingly51% of participants either could not estimate how much of their salary they could replace in retirement, or estimated the percentage they could replace was less than what they needed. At the same time, 47% remained confident in their ability to maintain their standard of living in retirement.

The third-quarter 2008 survey covered more than 400 defined contribution plan participants, the company said. The survey report is available here .