The popularity of retirement income solutions continues to increase. According to new research from Aon Hewitt, 28% of plan sponsors now offer in-plan retirement income solutions, including professionally managed accounts with a drawdown feature, managed payout funds, and insurance or annuity products that are part of the fund line-up. This is nearly twice the percentage of employers (16%) that offered them a year ago.
Among employers that don't currently offer a retirement income option, 30% said they're likely to add them in 2013. “Some employers are hesitant to add these features in part because of administrative and fiduciary challenges associated with implementation,” according to Patti Balthazor Björk, director of Retirement Research at Aon Hewitt. “Additionally, some companies are waiting to allow the market to mature and products to evolve further.”
Other highlights of the Aon Hewitt study include:
• 37% of employers have recently reviewed the total DC plan costs (fund, recordkeeping, and trustee fees). Among those who have not, 95% are likely to do so in 2013.
• Last year 35% of employers completed a review of DC fund operations, including fund expenses and revenue sharing; 87% plan to do so this year.
• 31% of employers recently changed their DC plan fund lineup to reduce costs. More than half (52%) of the remaining companies may do so in 2013.
• When a premixed portfolio is available, to plan participants, 63% of them allocate to it, up from 51% in 2009. Among those who use a premixed portfolio, the average participant held 65% of their balance in premixed funds in 2011, up from 56% in 2009.
