Figuring out the retirement income issue for Americans is described as a “million piece jigsaw puzzle.” A new paper from the Defined Contribution Institutional Investment Association wants to help 401(k) plan sponsors sort it all out.
“The catalyst behind preparing this paper is that DCIIA believes helping 401(k) plan participants improve their financial security in retirement should be a primary goal of 401(k) and retirement income strategies can be a key part of achieving this goal,” Lew Minsky, President and CEO of DCIIA, said in a statement.
Fortunately, the organization notes, the “financial services industry has produced a variety of retirement income solutions intended to provide participants with a range of options to facilitate the drawdown of assets in retirement.” They range from tools that help participants determine how much to save, to in-plan and out-of-plan options that are designed to provide guaranteed or non-guaranteed income streams.
DCIIA’s paper describes many of the tools and withdrawal strategies currently available in the market. It also addresses the fiduciary, operational, administrative and communications implications that retirement income holds for plan sponsors, as well as best practices.
Within a particular company, stakeholders might find one or a combination of compelling factors as it considers retirement income solutions.
“Before you go too far down this road, it’s critical to identify the internal and external stakeholders who should be part of the retirement income conversation,” Minsky added. “Involving stakeholders early, and incorporating their feedback throughout the process, can smooth the path to adopting a retirement income solution.”
DCIIA’s paper reviews how plan sponsors have adopted retirement income solutions based on several motivating factors, including supporting employees’ retirement outcomes and transition to retirement, workforce management and retention, as well as meeting other corporate goals.
The paper also profiles plan sponsors that already adopted a variety of retirement income solutions based on their participants’ specific needs, and shows how they implemented solutions appropriate for their organization and participant base.
Access to retirement income products, education, planning tools and advice have the potential to significantly improve participant retirement outcomes. For these reasons, DCIIA believes plan sponsors’ time is well spent considering seriously whether their plan should adopt a retirement income solution.
Moreover, adopting a retirement income solution may help millions of 401(k) plan participants improve their financial security in retirement—a goal that is well worth the time and effort of evaluating and implementing the appropriate solution for your plan, the paper concludes.
