Study Looks At In-Plan Guarantees

New Jersey Sunset

The Insured Retirement Institute (IRI) has released a report that provides an overview of the advantages and the challenges associated with offering guaranteed lifetime income streams through employer retirement plans. The decline of defined benefit (pension) plans, coupled with the inexperience of most people  in managing lump sums received from 401(k) and other defined contribution plans, has meant that there is an opportunity for creative solutions to provide retirement security on a steady basis. The IRI study reaches the following conclusions:

• An overwhelming nine out of ten participants like the idea of income-generating options within their employer's plan.
• Although modest in numbers, Baby Boomers show increased preference for guaranteed income as they get older. 
• In-plan guaranteed income options protect against market volatility as retirement approaches.
• Group purchases lower fees.
• Better participant outcomes make for a happier workplace.
• Fiduciary concerns are a significant barrier to greater acceptance of in-plan guaranteed lifetime income solutions.
• Less control of retirement assets also is a concern.

The full report, Guaranteed Lifetime Income Options within Employment-Based Plans: Leveraging Advantages and Overcoming Challenges. is posted on the IRI website.

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