Employees Want Income Options in Retirement Plans, Survey Says
But Plan Sponsors Are Concerned About Complexity, Costs, and Choice
WASHINGTON, DC (January 23, 2025) – An overwhelming majority of workers participating in employer-sponsored retirement plans – 86% – want their employers to offer retirement income plans, with two or three income choices.
Those are among the major findings of Greenwald Research’s just-released 2024 In-Plan Insights Program. The annual program explores the changing landscape of retirement income options in defined contribution plans from the perspectives of plan participants, plan sponsors, and plan advisors through online surveys, in-depth interviews, and focus groups.
“The research shows that plan participants are most concerned about the impact of inflation on their retirement income, about running out of money in retirement, and that their retirement income sources won’t be simple and easy to manage,” said Greenwald’s Managing Director Eric Sondergeld. “While most participants want in-plan income options, sponsors are concerned about the complexities of offering them, the fees associated with them, and the reputation of annuities and guaranteed lifetime income (GLI).”
Only a quarter of plan sponsors say they currently have one or more retirement income options in place, while another three in 10 say they’re seriously considering implementing such options. But 57% are concerned that the complexity of those options make it difficult for participants to understand them. Almost as many – 56% – say fees associated with those options can make them unattractive to participants. Also discouraging, 51% of them say, is the reputation guaranteed income products and annuities have.
“I would be concerned about communicating (retirement income options) and rolling them out,” one plan sponsor says. “Making sure that participants are aware of the options and understand them is easier said than done.”
Both sponsors and participants point to GLI as desirable. Participants say that in choosing a retirement income plan, their top considerations are monthly payments that are guaranteed for life (57%), ease of understanding (53%), and acceptable fees/costs (48%). Sponsors considering adding an income option to their retirement income offerings cite a target date fund that includes GLI (43%) and a managed account that includes GLI (37%) as preferred options.
Other key findings of the latest In-Plan Insights Program include:
- Sponsors also identified methods to increase their comfort level with adding retirement income options to their defined contribution plans. They include having a clear, proven process for selection the option(s) to include (39%); the ability to offer a choice or suite of retirement income options rather than just one (35%), and proof that employers who have implemented these options have not experienced legal issues or litigation (33%).
- Plan sponsors want education on retirement income options, too. Resources they say would be most helpful include side-by-side comparisons of retirement income options available in the market (53%), fact sheets that explain these options in layman’s terms (45%), and recommendations from their retirement plan advisor or consultant (38%).
- Just over half of plan participants (51%) feel employers have a high level of responsibility for helping employees generate income or develop a withdrawal strategy for retirement.
- Participants want access to tools and education to help them decide whether – and when – to start receiving retirement income. That includes personalized projections and income comparisons, education on all they ways they might withdraw income from their plan, and a tool for recommending an option and how much to invest in it.
- Participants are split between wanting a completely automatic retirement income experience (49%) – in which they are automatically enrolled in an option and the income payments will be automatically triggered at retirement – and a completely manual experience (51%) where the participant will do all the work.
About the Research
Greenwald’s In-Plan Insights Program is designed to explore the changing landscape of retirement income options in defined contribution plans. The 2024 sponsor/advisor survey was conducted from October 27-30, 2024 and included 500 plan sponsors. The participant survey was conducted from October 3-30, 2024 and included 1,017 plan participants. The sponsor and advisor interviews were conducted from June 22-July 9, 2024. Plan participant focus groups were conducted July 10-11, 2024.
The 2024 In-Plan Insights Program reports are available for purchase. Contact Greenwald Research at info@greenwaldresearch.com to learn more.
About Greenwald Research
Greenwald Research is a consultative partner to health and wealth leaders that leverages industry expertise, access to experts, and a custom, collaborative approach to produce trusted insights and meaningful connections that drive understanding and inform strategic action. For more information, please visit www.greenwaldresearch.com.
Contact:
Herb Perone
media@greenwaldresearch.com
