DC Participants Favor Guaranteed Income Options

The majority of defined contribution (DC) plan participants participating in a recent poll are interested in having a guaranteed income option.

According to the survey from Transamerica Retirement Solutions, more than three-quarters (78%) of younger participants—ages 40 to 49—showed interest in guaranteed income options in their DC plan, and another 62% indicated they would invest in one now if they had the option. Sixty-five percent of those ages 50 and older reported interest in these options, with 43% claiming they would invest now if they had the choice. However, 40% of these older participants were uncertain whether they would invest in a guaranteed income option.

Nearly 43% of participants age 50 and older said they were not sure what distribution options were available in their DC plan, and nearly half (48%) did not know if a guaranteed income option was even available in their plan.

“It is extremely encouraging to see so many participants aged 50 and older showing interest in these types of benefits,” said Gerry Katz, senior vice president, Transamerica Retirement Solutions. “But the ‘not sure’ population is of concern. This response could indicate either a lack of understanding of retirement security risks or uncertainty about how guaranteed income products address these risks. The fact they are unsure reveals the need for more effective communications targeted to preretirees.”

The Transamerica Retirement Solutions guaranteed distribution option survey was conducted online for Transamerica Retirement Solutions by EACH Enterprise in the third quarter of 2012 among 602 active DC plan participants.