PLANSPONSOR Roadmap: From Consideration to Action—Or Inaction

A decision on whether to offer retirement income to participants—if at all—goes deeper than evaluating products, according to panelists at the 2026 PLANSPONSOR Roadmap session, “Retirement Income—From Consideration to Action—or Inaction.”

During the third and final session of PLANSPONSOR’s Retirement Income Livestream Series, experts discussed considerations for plan sponsors when trying to decide whether retirement income products are right for their retirement plan philosophy and participant needs. Speakers also explained key reasons that sponsors might choose to delay adoption.

Evaluating Internally

Kathleen Kelly, president of retirement and wealth for the Mid-Atlantic region at Marsh Agency, says plan sponsors should begin their retirement income evaluation process by understanding their plan’s demographics and objectives, rather than comparing products.

“The question is not simply, ‘Which solution we should select?’” Kelly says. “It really is, ‘What retirement income problem exists in our workforce, and is there a responsible way to help address it?’”

Kelly says key considerations for plan sponsors include the company investment committee’s “view in helping former employees in their retirement journey … comfort level with adopting relatively new strategies … [and] how proactive or prescriptive” the committee wants to be in helping employees fulfill the need for retirement income.

From a plan demographics perspective, Kelly says, the sponsor may consider how many of their participants are nearing retirement age, employee turnover and what terminated participants have historically done with their balances, including whether they are likely to remain in the plan after retirement.

“If the answer is that the committee is ready to dig deeper and to analyze specific choices for potential inclusion in the plan, then we move to more detailed information gathering and discussion,” Kelly says. And once the sponsor moves to that phase, it can start its “suitability discussion,” which includes thinking about which types of products and strategies might best align with the plan, Kelly says.

To Adopt or Not to Adopt

Sometimes, a sponsor will, through its due diligence, decide that it does not want to offer a retirement income solution. Kelly says that decision need not be rushed, and the right answer varies by client.

“The decision is not binary,” Kelly says. “A sponsor can responsibility implement, responsibly wait, or decide that a different form of retirement income support is appropriate altogether.”

Tim Byrd, vice president of the North Carolina State Employees’ Credit Union, says his company has taken a wait-and-see approach to adopting certain retirement income products. With new solutions being announced daily, he says, it is up to the sponsor to make sure it fully understands the offerings before it adopts them.

While the credit union has adopted systematic withdrawals and managed accounts with income components, it has held back from adopting more nascent products that are not yet in a “mature state,” Byrd says. He does not dispute that all solutions in the market might be good fits for the credit union’s employees, but he says it is too early to tell.

In addition, while industry surveys have shown participants are interested in earning guaranteed income, “interest in the outcome does not automatically translate to interest in the particular product,” Kelly says. She cautions that employees may not entirely understand the options available to them and may be hesitant about complicated enrollment processes. Participants may also have concerns about different products’ liquidity, portability, legacy value to beneficiaries and fees.

Kelly says the industry still has plenty of work to do to translate interest to adoption, especially through educating employees. But sponsors can take a “do no harm” approach by evaluating a product through the lens that some participants will adopt and find it useful, and others will not. For those who do not choose to adopt it, there will be nothing that binds them to a solution they do not want.

Byrd recommends that plan sponsors leverage their advisers in deciding which options to select. Like Kelly, he says the process should not be rushed—as fiduciaries, sponsors must do what is in the best interest of their participants.

“What matters is that the committee follows a disciplined process, evaluates relevant alternatives and documents the rationale,” Kelly says. “The standard is prudence, not perfection.”