What You Need to Know
- Nine in 10 DC participants express interest in products designed to generate retirement income,
- Adoption of in-plan income solutions has lagged in large part due to the COVID-19 pandemic.
- Women in all age groups were more concerned and felt less prepared for retirement than men.
Nine in 10 defined contribution plan participants express interest in products designed to generate retirement income, and a similar proportion say that having guaranteed income in retirement would positively affect their financial well-being, according to survey results released this week by BlackRock.
Three-quarters of respondents who were already retired report that having secure income in retirement makes a bigger difference than they thought it would.
The vast majority of plan sponsors agree, indicating that they feel responsible for helping participants generate or manage their income in retirement, BlackRock said.
BlackRock noted that although the 2019 Secure Act reduced barriers for plan sponsors to offer in-plan income solutions, adoption has lagged in large part because of reprioritization of human resources and benefits departments in response to the COVID-19 pandemic.
However, 82% of plan sponsors surveyed that do not currently offer a retirement income solution plan to add one in the next 12 months.
“Retirement income is a new frontier, and we’re encouraged that front-footed plan sponsors are embracing retirement income solutions — but the demand is much more urgent than the pace of adoption,” Anne Ackerley, head of BlackRock’s retirement group, said in a statement.
“Workers saving for retirement today are concerned that they are going to outlive their savings, or that they may not enjoy a high quality of life in retirement. The time is now for companies to provide their employees with solutions that can help bring peace of mind.”
Escalent conducted an online survey in March among 225 large DC plan sponsors and more than 1,000 plan participants and 300 retired participants in the U.S.
The survey results showed that the pandemic has had a negative effect on retirement preparation for some, and has aggravated concerns for those plan participants who were already behind in their savings.