Dive Brief:

• American employers offering defined contribution (DC) retirement plans (401k etc.), are coming around on lifetime income solutions meant to help employees improve their financial security in retirement, according to new survey.
• Willis Towers Watson's Lifetime Income Solutions Survey found those lifetime income strategies include education and the tools necessary to help plan participants determine how to spend down accumulated savings in retirement. Also, it found employers use other in-plan and out-of-plan options that create streams of income from employer-sponsored retirement plans.
• The survey found that roughly one-quarter of employers (23%) have adopted one or more of these lifetime income solutions, while another 18% will either implement a solution this year or consider solutions for next year and beyond.

Dive Insight:

Employees and retirees face major obstacles as they try to save for retirement so that they have a regular, adequate income that secures their future. At the same time, employers grow increasingly concerned about financial wellbeing and retirement readiness. Plus, life spans are longer and a range of other financial responsibilities are pulling against saving for retirement. 

While many plan sponsors are taking a cautious approach to adopting lifetime income solutions, that means there is nowhere to go but up. The WTW survey found 53% of plan sponsors that haven’t adopted a solution say they may do so in the future. What's keeping them away? 81% cited fiduciary risk as a "very" or "extremely" important barrier.

Employers worry that their employees have enough income to retire comfortably, and want to help them build adequate retirement income. But many continue to offer solutions that, in the view of experts, aren’t nearly as effective at minimizing longevity risk. Instead, Willis Towers Watson says insurance-backed products, annuities and other retirement income-generating options offer a better choice.