PLANSPONSOR Roadmap: All About Annuities 

As defined contribution plans increasingly replace defined benefit plans, annuities have gained attention as a viable option for providing participants with the steady payouts in retirement that traditional DB pensions have offered. 

In PLANSPONSOR’s October 15 Roadmap Retirement Income session, “All About Annuities,” that theme was apparent.  

Keith Golembiewski, director of annuity research at LIMRA, outlined how the insurance products have changed over the decades and why they are reemerging as a key component of retirement strategies. He noted that annuities can serve as an “extra leg” of the traditional retirement stool—once supported by Social Security, pensions and personal savings—now largely missing the pensions leg. 

Golembiewski said the growing interest is fueled by participants’ desire for predictable income, which defined contribution plans lack since they do not automatically offer payouts in monthly installments, like a traditional pension.  

Citing LIMRA research, he said 86% of individuals agree that having guaranteed lifetime income gives them peace of mind in retirement and that almost 90% of individuals surveyed reported believing guaranteed income is important to a secure retirement, he said. 

Expanding Market 

The annuity market has experienced substantial growth, Golembiewski said. Total industry sales are projected to reach $450 billion in 2025, roughly double the volume seen in 2020. Much of that increase has come from fixed-rate deferred annuities, fixed-indexed annuities and registered index-linked annuities. 

Rising interest rates, increased awareness and more financial professionals viewing annuities as part of overall financial planning have all driven growth, he said. Elevated interest rates have made annuity yields more attractive, while product innovation has expanded the range of income and investment features available to consumers. 

Golembiewski also emphasized that annuities span a wide range of structures and risk levels. Fixed products provide a set rate of return and protect principal, while variable and RILA products allow for greater upside potential along with the possibility of losses. 

He compared fixed-rate deferred annuities to “a bank CD type of product where you are guaranteed a certain rate for a period of time with no chance of loss of principal.” 

In-Plan Opportunities 

Turning to defined contribution plans, Golembiewski said the in-plan annuity marketplace is at “a tipping point.” LIMRA data show that nearly 95% of workers believe income options should be available within their employer-sponsored retirement plan. 

He noted that regulatory progress—such as the Department of Labor’s recent decision to classify AllianceBernstein’s Lifetime Income Strategy as a qualified default investment alternative —could spur broader adoption by plan sponsors. 

“If the DOL starts believing these product solutions can be used as a default option, that really should start seeing significant growth of this market,” he said. 

Golembiewski concluded that the combination of demographic shifts, higher interest rates and greater plan sponsor awareness has positioned annuities for continued expansion. “We are at that perfect time to continue to see this market evolve and grow,” he said.