Retirement Industry Trends to Look Out for in 2025
Industry leaders expect a wave of retirement income adoption and innovation heading into 2025, finds a report released last week by the Institutional Retirement Income Council (IRIC).
The expectation comes as more employers and participants seek out guaranteed options, as a response to growing costs and diminished savings. A 2024 report by Invesco found that participants prefer in-plan retirement income features, with 54% saying they would feel better about keeping money in their employer’s plan after retiring, so long as they obtain access to a monthly payout feature.
Still, other research from Allianz Life reports that just 44% of Americans currently have a plan for how they will generate income in retirement, despite more plan sponsors implementing guaranteed income in their plans in 2024.
As the rate of traditional pensions decline in the workplace, IRIC expects rising popularity among the features.
“Next year will be the acceleration of plan sponsor adoption for in-plan retirement income options,” said Kevin Crain, executive director of IRIC. “2024 was when in-plan retirement income offerings continued to evolve regarding product creation and DC plan recordkeepers’ implementation. Plan sponsors evolved financial wellness programs. Automatic solutions advanced with increased plan adoption and more aggressive plan design, which resulted in greater success for participant savings. Also, industry studies throughout the year reported on participant and plan sponsor agreement that in-plan retirement options are desired.”
Read on for IRIC’s top retirement industry trends in the new year.
New Focus on In-Plan Retirement Income
The IRIC expects employers to increase their evaluation and selection of in-plan retirement income solutions in the defined contribution (DC) marketplace, to include hybrid target-date funds (TDFs), hybrid managed accounts, annuity marketplaces, and systematic withdrawal programs.
The organization also anticipates a surge of education with in-plan income options, including in-depth plan and participant utilization studies.
NEXT: Product Development and Increased Engagement and Demand
