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LIMRA flags double-digit rise in in-plan income guarantees

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Three million participants had access to an in-plan income guarantee through their employee-sponsored retirement plan in 2014, a 32 percent increase from 2013, according to a new study from the LIMRA Secure Retirement Institute.

In addition, the research finds there was a 24 percent increase in the number of participants electing an in-plan guarantee, reaching 71,300 in 2014.

In 2014, the number of retirement plans offering in-plan guarantees grew 41 percent to 33,500. More than $132 billion in assets are in plans that offer an in-plan guarantee, up 27 percent compared with 2013.

Prior LIMRA Secure Retirement Institute research reveals that consumers are most concern about having enough money to last throughout their retirement. Eight in 10 U.S. workers believe that employers should provide ways to convert savings into retirement income according to Institute research.

Younger workers are particularly interested in this option: 90 percent of workers ages 18 to 34 say they “somewhat” or “strongly” agree that employers should provide avenues to convert savings into income at retirement. 

Currently sold in retirement plans are two types of in-plan guarantees: the lifetime withdrawal benefit (GLWB) and the deferred income annuity (DIA). These products allow participants in retirement plans to protect savings and secure future retirement income while working and contributing to their plans.

The study finds small plans (with less than $10 million in assets) are most likely to have to offer in-plan guarantees. In 2014, 31,000 small plans, 1900 mid-size plans ($10-199 million in assets), and 80 large/mega plans ($200 million-plus) offered in plan guarantees to workers. 

Small plans are more likely to offer in-plan income guarantees because life insurers developed early in-plan guarantee products, which tend to be in the small and mid-size markets. 

Total assets covered by an in-plan guarantee reached $3.6 billion, a 26 percent increase over last year.  The average amount covered per participant is $50,000.