Amid Market Volatility, Insurers’ Focus Shifting to Annuities and Retirement Income

More than half (56%) of insurance carriers responding to a Goldman Sachs Asset Management survey indicated that they already offer an in-plan annuity solution and another 33% reported that they were considering the option.

Insurance carriers have accelerated their focus on annuities amid the year’s market volatility, showing an increased interest in providing retirement income solutions, innovating and implementing artificial intelligence, according to a Goldman Sachs Asset Management survey released Thursday.

Among the survey’s findings: heightened, with 64% of respondents ranking it among their top three business priorities. Many already have worked on the solutions, with 56% of respondents indicating that they already offer an in-plan annuity solution and another 33% reporting that they were considering the option.

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Additionally, 31% of respondents said they were integrating annuities into managed accounts and 27% into target-date funds. More than half of respondents said automatic plan defaults could be the most effective tool to drive widespread adoption of in-plan annuities for the decumulation phase of retirement saving.

“There has been a bit of a resurgence in the focus on guaranteed lifetime income annuities out of plan, and now we’re starting to see that parlay in-plan in a more meaningful way,” says Marci Green, head of retirement distribution and third-party insurance at Goldman Sachs Asset Management.

The survey was conducted between March 24 and April 22, with 102 industry participants from 31 insurance companies. Since the responses were collected through President Donald Trump’s so-called Liberation Day, the apex of trade war uncertainty, which has since slowed notably, the responses reflected insurers’ priorities amid continued market volatility.

Meanwhile, registered index-linked annuities were popular among respondents, with 77% of managers prioritizing them. In addition, 60% of respondents said guaranteed variable annuities are a key focus this year, up from 44% in 2024, according to the survey.

Insurance carriers are also diversifying the underlying indices. AI-themed strategies remain popular, while interest in international and global indices have seen a dramatic rise: up to 37% from 21% a year prior, reflecting a push for geographic diversification in uncertain times—although the study’s timing likely influenced the increase, at least in part, Green says.

“What we’re seeing is a diversification beyond what was a priority of the past,” Green says, noting that the increase does not mean diversification was not a priority previously, but that insurers are “zeroing in” on refined offerings.

Another key development is the growing embrace of AI: 90% of insurers indicated they believe AI will play a critical role in helping investors better understand annuities and guaranteed income. Nearly half said they expect AI to significantly improve investor education and engagement, while 25% said they see it enhancing delivery of personalized advice.

On the operational side, 51% of respondents reported deploying AI to boost sales efficiency, and 45% reported doing so to streamline risk management.

The survey also underscored a notable pivot in distribution strategy: registered investment advisers overtook independent channels as the primary growth driver, with 45% of insurers expecting the most development among RIA providers —up from last year’s second place standing.

“Everyone sees that there’s a change in terms of how we’re going to be able to get these important solutions and benefits in the hands of the retiree community that needs them,” Green says.

EBRI Finds Increased Rate of Withdrawals From HSAs in 2023

Despite higher spending on health care, HSA account balances continued to increase over the course of the year.

One-third of health savings account holders withdrew more than they contributed, despite average end-of-year HSA balances ending higher than average beginning-of-year balances in 2023, according to an Employee Benefit Research Institute study.

Out-of-pocket patient spending on health care increased in 2023, rising 7.5% over 2022.

The report summarizing the study, “Health Savings Account Balances, Contributions, Distributions, and Other Vital Statistics, 2023: Evidence From the EBRI HSA Database,” was based on EBRI’s HSA Database, which comprises 14.5 million account holders.

“HSA-eligible health plans are an important part of the health benefits landscape. Yet, there is little empirical research about how HSAs are used by workers,” said Jake Spiegel, one of the co-authors of the report and a senior research associate for health and wealth at EBRI, in a statement. “Such analyses can not only inform strategies for plan sponsors wishing to help workers better utilize their HSAs, but also help HSA providers better position their offerings, as well as help policymakers craft sound policy.”

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The report stated that one of the largest advantages HSAs offers is the ability to invest assets within the accounts and let investments grow on a tax-free basis. However, the report’s analysis revealed that only 15% of account holders invested their HSAs in assets other than cash.

In addition, only 43% of account holders received an employer contribution. Accounts that received an employer contribution had higher total contributions and were more likely to invest.

More than half of the HSAs in EBRI’s database had a distribution in 2023, and the average distribution amount was $1,801, according to the report.

On average, EBRI found older accountholders contributed more to their HSAs, had higher balances, more frequently took distributions and had a higher likelihood of investing at least some portion of their HSA in assets other than cash.

The Republican tax bill making its way through Congress includes several provisions that would expand HSAs.

The EBRI HSA Database includes $48.4 billion in assets.

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