U.S. Retirement Savers Oppose Annuitization Mandates: ICI

What You Need to Know

The Secure Act encourages employers to add voluntary lifetime income options to 401(k) plans.
ICI asked about government lifetime income feature requirements, rather than about voluntary options.
The strongest opposition came from relatively high-income retirement savers 50 and older.

Typical U.S. workers hate the idea of the government making them convert a portion of their 401( k) plan cash into a lifetime stream of income when they retire, according to analysts at the Investment Company Institute.

Sarah Holden and other analysts at the ICI have presented data supporting that position in a new survey results summary.

The survey team asked asked the survey participants to react to a series of statements about retirement savings plans.

One of those statements was this: “The government should require retirees to trade a portion of their retirement plan accounts for a fair contract that promises to pay them income for life from the government.”

About 79% of all participants in the latest survey said they disagreed with the idea of an annuitization mandate. The overall percentage who oppose the idea of an annuitization mandate is up from 71% in 2009, when ICI released a summary of the results from the first wave of the retirement savers’ opinion survey.

Demographic Slices

Survey participants younger than 30 with household income under $30,000 per year were least negative about the idea of an annuitization mandate: Only 63% of the participants in that demographic group said they opposed a mandate.

Participants 50 or older with household income of $50,000 per year or higher were the most negative about the annuitization mandate statement. About 83% of the participants in that group rejected the idea of a mandate.

The Survey

ICI has commissioned retirement savings opinion surveys of U.S. adults ages 18 and older every year since 2009. For the latest survey, which was conducted in late 2021, a survey organization polled 2,041 U.S. adults.

ICI researchers found that the percentage of survey participants with a very or somewhat favorable view of 401(k) plans and similar defined contribution retirement plans has increased to 75% in the latest survey, from 63% in 2009.

The Background

Some countries encourage workers to save for retirement, either through an employer-sponsored arrangement or on their own, then require the workers to convert a portion of the savings into a lifetime stream of income when they retire.

The federal Secure Act now encourages U.S. employers to add voluntary lifetime income options to 401(k) plans but does not require them to do so.

ICI asked only about government annuitization mandates, not about the kinds of voluntary lifetime income options supported by the Secure Act.