However, most are offering systematic withdrawals, lifetime education and planning tools, and in-plan managed account services; they are still leery of offering guaranteed income solutions such as annuities.
Defined contribution plan participants are unlikely to feel confidence about retiring when they receive no retirement income projections and no help defining discretionary versus required expenses.
The firm is anticipating passage of the SECURE Act, which offers an annuity selection safe harbor for defined contribution (DC) plan sponsors.
A professor at the UCLA Anderson School of Management discussed biases that must be considered when helping people make retirement income decisions.
The firm has transferred $750 million in pension obligations to American General Life Insurance Company, part of AIG’s life and retirement business.
In his experience leading Principal’s retirement income solutions business, Sri Reddy says, the No. 1 thing people get wrong about annuities is to say that purchasers of such products are investors.
Speakers at a Brookings Institution event agreed that a financial strength criterion asking how sound is an annuity carrier should be a critical part in any annuity selection safe harbor for defined contribution (DC) plan sponsors.
Tontines are a type of historical annuity structure that was first put into well-documented practice as far back as the 1600s.
Continued net flows out of the DC system, driven by Baby Boomer retirements, could cause more provider consolidation and redoubling of efforts by recordkeepers to keep assets in DC plans.
Willis Towers Watson offers nine actions for DC plan sponsors to mitigate risks in 2019.
Forty-two percent of consumers in a LIMRA SRI study said they were open to the idea of annuities, and 61% say having enough money to last through retirement years is their single most important objective for their assets in retirement.
More than half of Americans say they would prefer guaranteed income of $660 a month over a $120,000 lump sum, LIMRA SRI found in a survey.
They are worried about longevity risk, the Plan Sponsor Council of America says.
A report details how utilizing the savings through health management can fund staggered annuities to help pay for health care expenses in retirement.
One option is through a profit sharing plan that invests the money in an annuity once a participant retires.