At the RPAG National Conference, RPAG Chief Investment Officer, Jeff Elvander, led a lively discussion on retirement income, featuring industry experts from Capital Group, BlackRock, and Nuveen. As retirement income solutions gain traction in the marketplace, plan sponsors are increasingly interested in providing this benefit to participants, who are more reliant than ever on defined contribution (DC) plans.
The panel underscored that while retirement income isn’t a new topic, recent trends show a significant shift in both plan sponsors' and participants' interest. According to a BlackRock survey, 89% of participants say guaranteed income would positively impact their current well-being, and 71% would save more if their plan offered a guaranteed income solution. With 401(k) plans now holding more retirement assets than defined benefit (DB) plans, the demand for income options is at an all-time high.
Jonathan Young, from Capital Group, pointed out that while retirement income has always been a priority, biases against annuities and complexity in plan design have hindered adoption. He emphasized that retirement income can be achieved through various solutions, it's not an all-or-nothing choice. Advisors should have a clear point of view on retirement income and share it with clients, helping them understand that solutions range from systematic withdrawals to lifetime income guarantees.
Brendan McCarthy, from Nuveen, provided historical context, explaining how 403(b) plans have successfully incorporated guaranteed income for years, and now 401(k) plans are finally catching up. He noted that new Safe Harbor annuity provisions aim to make guaranteed income a staple in DC plans, allowing participants to enjoy pension-like benefits without the high costs associated with DB plans.
With increasing regulatory support, greater flexibility, and innovative delivery options, retirement income is now more accessible than ever within DC plans. As the panel concluded, advisors are in a prime position to help plan sponsors navigate this landscape, providing much-needed income solutions that align with participants' evolving retirement needs.
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