Plan Sponsors Want More Information on Guaranteed Lifetime Income Solutions

As more employers and their employees prioritize financial wellness, a new study finds both groups are also increasingly interested in guaranteed lifetime income investment options.

Nationwide Retirement Institute’s “2021 In-Plan Lifetime Income” survey found nearly nine in 10 plan sponsors and participants (88%) agree that income in retirement is vital to financial security. And eight in 10 retirement plan sponsors say participants want guaranteed lifetime income investment options.

The growing interest may be tied to a lack of financial confidence for many participants, Nationwide says. Half of the participants surveyed stated that they have concerns about managing expenses and lifestyle choices in retirement, and 48% are concerned about outliving their income.

The study found that employers are looking to solve this need for their employees, as four in 10 (41%) say that they do not currently offer guaranteed lifetime income options but are considering them for the future. However, 60% of plan advisers say they don’t believe their clients are looking to explore lifetime income options, which the firm says could be a missed opportunity.

Nationwide’s study also showed participants are interested in guaranteed income, as 79% said they would be at least somewhat likely to roll over a portion of their current retirement savings into a lifetime option. For those age 45 to 54, this rose to 87% of participants.

“For many Americans, understanding how their employer-sponsored retirement plan savings translates to retirement income will soon come into greater focus,” Eric Stevenson, president of Nationwide Retirement Solutions, said in a statement. “New lifetime income illustrations will begin appearing on participant statements over the next year, based on a new requirement created by the 2019 SECURE [Setting Every Community Up for Retirement Enhancement] Act, with some participants seeing this as soon as this month. For some, it will be a wake-up call that they haven’t saved enough, and we believe this visibility will lead to even greater interest from plan sponsors for new investment options that help their plan participants address their lifetime income needs.”

Plan sponsors that haven’t yet implemented guaranteed lifetime income say they are waiting for their financial advisers or consultants to counsel them on choosing the right benefit for their company’s retirement plan. Nine in 10 plan sponsors say they trust their advisers or consultants to counsel them on choosing benefits that fit the retirement plan and consider them to be the primary source in learning more about guaranteed lifetime income investment options.

But advisers and consultants might not even realize it’s the appropriate time to talk through these benefits with their clients. While the survey showed seven in 10 employers plan to analyze their retirement plans within the following six months, 82% of advisers and consultants anticipate only a few or even none of their plan sponsor clients will evaluate their plan in that time frame.

“There is an immediate business opportunity for advisers and consultants to initiate conversations with plan sponsors about adding guaranteed lifetime income investment options,” Stevenson says. “Plan sponsors are telling us they’re hungry for more guidance and advisers and consultants are in prime position to help by exploring these solutions with their clients today.”