Skip to main content

You are here

Advertisement

2016 No Game Changer for Retirement Income

With more and more Americans retiring every day, a new survey suggests that plan sponsors are considering more retirement planning options, though adoption barriers remain.

According to AonHewitt’s “2016 Hot Topics in Retirement and Financial Well-Being,” the actions most likely to be undertaken by the 254 plan sponsor respondents in 2016 were:

26% — online modeling tools or apps to help participants determine retirement spending (66% already offer)

13% — plan distribution option allowing participants to elect automatic payment from the plan over an extended period of time (45% already offer)

10% — managed account with drawdown feature within the plan (30% already offer)

7% — managed payout funds within the plan (9% currently offer)

5% — annuity or insurance products as part of the fund lineup (7% currently offer)

2% — facilitating purchasing annuities outside the plan (12% currently offer)

1% — ability to transfer assets to a defined benefit plan in order to receive an annuity (4% offer at present)

Offering a qualifying longevity annuity contract, or QLAC, that permits an in-plan deferred annuity purchase — an option widely touted in recent months by the Treasury Department, was likely to be offered in 2016 by only 1% of respondents — which, if true, would double the current offering rate.

Major Barriers

As for what is holding plan sponsors back from offering “real” retirement income options as part of the plan, survey respondents cited the following as major barriers to adding an in-plan income solution:

53% — waiting for the market to develop more (29% cited as a minor barrier)

48% — fiduciary concerns (30% cited as a minor barrier)

40% — operational or administrative concerns (45% cited as a minor barrier)

34% — participant utilization concerns (41% cited as a minor barrier)

28% — difficulty with participant communication (43% cited as a minor barrier)

20% — cost barriers (40% cited as a minor barrier)

10% — preference for participants to leave the plan at termination (27% cited as minor barrier)

In sum, 2016 looks to be a year of déjà vu when it comes to retirement income offerings for workplace retirement plans.

Advertisement