In-Plan Options: The Next Frontier for the Insured Retirement Industry?
By Cathy Weatherford
Insured Retirement Institute (IRI)
Washington, D.C. – The Insured Retirement Institute (IRI) today released a new study that pinpoints guaranteed lifetime income options offered within employer-provided defined contribution plans as an opportunity to address many emerging retirement security challenges. The report found that workers who convert a portion of their accumulated assets into a guaranteed income stream can effectively manage many of the risks inherent to the defined contribution retirement system such as longevity risk, volatility and sequence of returns risk, as well as excess withdrawal risk.
“With the demise of the traditional pension has come a host of new challenges, but guaranteed lifetime income options offered within retirement plans have the potential to help American workers attain a financially secure retirement,” IRI President and CEO Cathy Weatherford said. “With an increasing amount of consumers agreeing that annuities are a critical component of a retirement strategy, there is an appetite for these types of options. In fact, nine in 10 workers would like for their plan sponsor to offer an income-generating option within their retirement plan. And so there is a tremendous opportunity here for the insured retirement industry and plan sponsors to work together to make guaranteed lifetime income options more accessible and tangible. It’s in everyone’s best interest to overcome any hurdles and make it happen.”
Presently fiduciary concerns are the most significant obstacle to more widespread inclusion of guaranteed lifetime income options within plans. The Department of Labor adopted rules in 2012 intended to help plan sponsors understand how to satisfy their fiduciary obligations, but the rules included a broad and vague requirement that employers conduct a detailed review of insurers’ financial condition and determine that all long-term commitments can be met. Given the long horizon of these obligations, many plan sponsors may not be well-equipped to manage the prescribed endeavor and related legal complexities. As a result, fiduciary concerns linger and remain a deterrent to the large-scale availability of these in-plan options.
The IRI report also noted the benefits to plan sponsors of offering in-plan options. In addition to providing employers with a workforce management tool, in-plan guaranteed retirement income options have been found to increase plan participants’ satisfaction, confidence, and improved long-term investing behaviors.
The full report can be found at here.
About the Insured Retirement Institute:
The Insured Retirement Institute (IRI) is a not-for-profit organization that for twenty years has been a mainstay of service, commitment and collaboration within the insured retirement industry. Today, IRI is considered to be the authoritative source of all things pertaining to annuities, insured retirement strategies and retirement planning. IRI proudly leads a national consumer education coalition of nearly twenty organizations and is the only association that represents the entire supply chain of insured retirement strategies: Our members are the major insurers, asset managers, broker-dealers/distributors, and 150,000 financial professionals. IRI exists to vigorously promote consumer confidence in the value and viability of insured retirement strategies, bringing together the interests of the industry, financial advisors and consumers under one umbrella.
IRI’s mission is to: encourage industry adherence to highest ethical principles; promote better understanding of the insured retirement value proposition; develop and promote best practice standards to improve value delivery; and advocate before public policy makers on critical issues affecting insured retirement strategies and the consumers that rely on their guarantees. Visit www.IRIonline.org today to experience the vast resources of the Insured Retirement Institute for yourself.