The number of companies offering lifetime income options remains fairly low, at just 12%, according to a new report. While that’s twice as many as in 2012, the percentage of plan sponsors considering adding these options has dropped significantly since then.
The percentage of companies considering adding lifetime income offerings has dropped from 31% in 2012 to 12% today, according to Towers Watson's 2014 North American Defined Contribution Plan Sponsor Survey.
Low utilization rates are one likely driver of the drop in interest, according to the report.
Among the 457 U.S. employers surveyed, the factors cited as driving disinterest in the options were:
- lack of participant demand (57%)
- fiduciary risk/lack of clarity regarding safe harbor (41%)
- unfamiliar with market offerings (24%)
- cost (23%)
- market offerings not satisfactory (18%)
- other (12%)
Towers Watson notes that, even when offered to retiring participants, lifetime income distribution is chosen by less than 5%.
