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View More Press Releases by Institutional Retirement Income Council

Press release:

Institutional Retirement Income Council Releases Issue Brief on Why Retirement Income Solutions Make Sense for 401(k) Plan Sponsors

Issued by: Institutional Retirement Income Council

Date: Feb. 4, 2015

ISELIN, NJ, February 4, 2015 – Providing retirement income options to 401(k) and other defined contribution plan participants can go a long way toward helping employees prepare for a financially-secure retirement.  However, offering these options can also be highly valuable to employers that sponsor defined contribution plans, according to a new issue brief published by the Institutional Retirement Income Council (IRIC), a non-profit think tank for the institutional retirement income planning community.

Over the past few years, there’s been a dramatic shift in the institutional retirement industry from discussions about accumulating retirement savings to decumulation and retirement income generation.  
Each day for the next 15 years, 10,000 members of the first generation of workers to broadly participate in defined contribution plans will turn 65. The reality, and accompanying stress, of having to convert savings to income is hitting home and many Americans are ill-prepared to make the complex financial decisions that will impact their quality of life for the next few decades.  

“Today’s plan sponsors are in a great position to help participants position themselves to achieve retirement income security by offering an in-plan solution,” said John Pickett, a senior vice president and financial advisor at CAPTRUST and an IRIC advisor who authored the issue brief.  “However, with so many retirement income options available to plan participants outside of the retirement plan, one might ask why a plan sponsor would consider an in-plan solution.   There are several answers to this question all of which can benefit plan sponsors without significantly increasing their retirement plan costs.”

The issue brief, Plan Sponsors and Retirement Income - What’s in It for Me?, discusses how offering in-plan retirement income products to plan participants can help employers:

•     Reduce plan expense

•     Improve workforce management

•     Attract and retain employees

•     Ensure the future success of the defined contribution model.


In the issue brief, Pickett says offering an in-plan solution can raise the average participant balance and make the plan more attractive to some service providers, thereby driving down costs for all participants.  Pickett notes that an in-plan option could encourage aging employees to retire before they become unproductive. He also believes that employees will be more attracted and committed to employers that offer retirement income options especially as 401(k) plans continue to replace defined benefit plans as their main retirement savings vehicle.  Finally, with the government’s significant investment in defined contribution plans, the brief says that these plans must deliver on their promise to successfully convert accumulated savings to retirement income. If they do not, the industry leaves itself vulnerable to legislative action that may force a less cost-efficient and less business-friendly model on employers.

“Adoption of a retirement income solution is a fiduciary decision. But so is the decision not to adopt.  Plan sponsors who want to maintain a cost-effective retirement program, manage their workforce, provide a competitive benefit, and reduce the risk of government mandates will want to give serious consideration to providing their employees with a retirement income solution,” concludes Pickett.

Copies of the issue brief, “Plan Sponsors and Retirement Income: What’s In It For Me?” are here.

About The Institutional Retirement Income Council

The Institutional Retirement Income Council (IRIC) is a non-profit, membership-based organization of industry advisors who are dedicated to sharing best practices, informing about legislative and regulatory issues, and facilitating solutions for plan sponsors and their participants.  IRIC’s mission is to facilitate the culture shift of defined contribution plans from supplemental savings programs to programs that provide retirement security. By providing a forum for insightful, solutions-oriented thought leadership on institutional retirement income, the IRIC is promoting the need for retirement income adequacy for defined contribution plan participants.  For more information, visit www.iricouncil.org

View More Press Releases by Institutional Retirement Income Council


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