[vc_row][vc_column width=”2/3″ el_class=”section section1″][vc_column_text]Amidst growing concern over the aging workforce, employers are finding alternative ways of supplementing their defined contribution plans. The goal? To help employees have a guaranteed income source and to stabilize the financial health of their workers.
Many people have mixed feelings about annuities, yet it could be a solution that we will start to see more of in the future as more of our workforce heads towards retirement. Willis Towers Watson found in its “2019 Lifetime Income Solutions Survey” that since 2016, nearly 25% more employers are now offering one or more lifetime income solutions. With 30% of employers currently offering multiple lifetime income solutions, an additional 60% are considering offering them to employees in the future.
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Employers who already offer lifetime income solutions typically provide them in the form of in-plan managed account services, lifetime planning, and education solutions, and standardized withdrawals throughout retirement. An increasing number of employers are starting to shift their focus towards retirement readiness, with nearly 50% announcing their change to a DC plan from a defined benefit plan.
Under 20% of employers offer an in-plan asset allocation system that guarantees an annuity option and a guaranteed minimum withdrawal. Willis Towers Watson Director of Investments Dana Hildebrandt says the numbers aren’t currently there yet for the number of employers offering effective income-generating solutions, including annuities. However, she is hopeful that the workplace will start to see an increase in lifetime income solutions.
So why aren’t employers quick to offer workers increased lifetime solutions? The complex intricacies of the administrative system is one reason, with more than 30% of companies citing this as their main reason for their hesitation. On the other hand, there was a 19% decrease from 2016 for the number of employers who listed fiduciary risk as their reasoning for the delay. Regardless of employer concerns, the growing demand for employees to be financially prepared as they enter retirement years is more important.
Time for a Shift
Hildebrandt says that as more employers become aware of the benefits that these plans offer, we will start to see an increase in the number of in-plan options. The survey reveals that over 30% of companies are planning on adding an in-plan deferred annuity investment solution while 25% are considering adding, during retirement, an out-of-plan annuity.[/vc_column_text][/vc_column][vc_column width=”1/3″][vc_single_image image=”36856″ img_size=”292×285″ style=”vc_box_shadow”][/vc_column][/vc_row]
