Are plan sponsors and participants aligned on retirement income preferences?

As we continue our discussion on Decoding Retirement Income, we now take another view and this installment evaluates the same paired comparison analysis conducted during a survey of plan sponsors and draws insights from comparing the results to the working and retired individual survey. In the full download, we share key insights on:   

• Prioritization of Longevity: Plan sponsors prioritize retirement income strategies that offer guaranteed income. Their top-ranked explicit preference was providing guaranteed income for life (29%).
• Preference for Partial Annuitization: When evaluating specific strategies, plan sponsors consistently favored partial annuities. The top two choices in the paired comparison analysis were a 30% partial annuity combined with a 70% investment portfolio, and a 60% partial annuity combined with a 40% investment portfolio.
• Implementation Barriers: The most significant questions identified in the survey for plan sponsors in adopting retirement income products include the resources required for integration and administration (43%), developing communication strategies to explain products (42%), and aligning product features with participant demographics (42%).
• Participant vs. Plan Sponsor Responses: In analyzing the responses of participants and plan sponsors, there is a gap wherein sponsors favor partial guarantees and lifetime income, while participants often prioritize full access to savings, even if it results in lower income and/or no guarantee.

If you would like to read more of our Decoding Retirement Income series, please see The Retirement Saver Preference Gap and Plan Design Considerations.