Different priorities for retirement income

While retirement income needs can be highly diverse, T. Rowe Price observed a severe reduction in the number of plan sponsors ignoring lifetime income options. For example, 59% of consultants’ and advisors’ DC plan clients said they did not have an opinion on retirement income in 2021. Today, that figure has decreased to 19%.

Furthermore, 18% currently offer an in-plan retirement income solution or are planning to add one within the next 12 months—an increase from 8% in 2021.

The reason? As employees struggle to save due to competing priorities and high inflation, more employers understand the shifting role they play in a participant’s retirement.  In fact, plan sponsors are realizing “a paternalistic style to do the right thing by participants,” said Sclafani.

Despite the increase in retirement income solutions, priorities differ from one plan to the next. Some plans may choose to focus on student loans or emergency savings programs instead, depending on their employees’ needs.

“Rather than focusing on short-term participant adoption rates to define success, we encourage plan sponsors to define success by offering a range of diverse solutions for their participants,” Sclafani added.

Next: Emergency savings adoption