A new generation of income annuities offered as part of a 401(k) plan allows employers to ease the burden of their employees by helping to ensure that their nest egg lasts as long as they do. This essentially helps plan participants create their own "personal pension."
Industry research points to a growing interest by plan participants in having their employer provide retirement-income products and solutions. However, currently very few plan sponsors have made retirement income available as part of their defined contribution plan.
Therefore, a primary focus of the IRIC is to educate plan sponsors and their consultants about the range of products and solutions that are available in the Institutional marketplace. By raising market awareness, providing a framework and creating evaluation tools so that products can be easily understood, the IRIC will make it easier for plans sponsors and their consultants to select the most appropriate solutions for plan participants.
Listen to an exerpt from Marty Schmidt, from the March 16, 2010 PLANSPONSOR Webcast, underscoring the different types of products in the Market. Matthew Radgowski also contributes to this piece.
In March of 2011, IRIC began making available Product Fact Sheets to assist plan sponsors, consultants, and advisors in the process of comparing retirement income products. View the announcement.
Carrying out fiduciary duties when adding a guaranteed retirement income option to a DC plan is indeed a new process for plan sponsors and their advisors. In this paper, ERISA attorney and IRIC member Fred Reish discusses the legal standards governing a fiduciary's decision to offer an insured retirement income product, particularly in choosing the insurance carrier that offers the feature. The paper further discusses important fiduciary considerations for evaluating the new generation of insurance products. The paper is available when you click on Fiduciary Review Process on the left.