Participants Ready for Guaranteed Income Options

Embedding in-plan guaranteed retirement income options in defined contribution (DC) plans is a key solution to improve DC plan participants’ overall retirement preparedness, a white paper asserts. 

“Better Participant Outcomes Through In-Plan Guaranteed Retirement Income,” a white paper from Prudential Retirement, also says these options help reduce pressure on employers that want employees to retire on time and enjoy a more secure and satisfactory retirement.  

Based on research data from a 2011 Prudential Retirement Plan Participant Survey and an analysis of its 2011 Book of Business, the white paper indicates American workers are concerned about a variety of retirement risks, including market volatility, longevity, investment performance, healthcare costs, inflation and the uncertainty of Social Security. The white paper notes that more than half of those polled said investing in in-plan guaranteed retirement income options helps make them more prone to better weather market volatility.   

The research also found that in-plan guaranteed retirement income options made participants feel more prepared for retirement and helped produce better retirement outcomes. In addition, many of those who already invest in an in-plan guaranteed retirement income option believe this is a good option as part of a default investment for employees, provided they can opt-out if they choose.  

The data showed “plan participants with in-plan guaranteed retirement income options were better diversified and contributed 38% more to their 401(k) plan than participants not invested in a guaranteed income option,” said Jamie Kalamarides, senior vice president, Institutional Investment Solutions at Prudential Retirement.  

The white paper is here.