ERISA

Lifetime Income: Annuity Interest?

10.07.2021

As the lifetime income illustrations mandated by the SECURE Act begin to appear on participant statements, experts predict there will be even more interest in annuities. Plan sponsors are addressing the growing interest in annuities with their plan advisors.

Guaranteed Lifetime Income?

Close to half of retirement plan participants worry about outliving their savings, while fully half express concern about managing expenses and “lifestyle choices” in retirement. These findings, from the The Nationwide Retirement Institute’s 2021 In-Plan Lifetime Income survey, point to the important options like annuities can play in retirement plans. As plan participants begin to better understand their lifetime income illustrations, interest in annuities is anticipated to grow. 401k Specialist reports:

 

“For many Americans, understanding how their employer-sponsored retirement plan savings translates to retirement income will soon come into greater focus,” said Eric Stevenson, president of Nationwide Retirement Solutions. “New lifetime income illustrations will begin appearing on participant statements over the next year, based on a new requirement created by the 2019 SECURE Act, with some participants seeing this as soon as this month. For some, it will be a wake-up call that they haven’t saved enough, and we believe this visibility will lead to even greater interest from plan sponsors for new investment options that help their plan participants address their lifetime income needs.”

 

Eight in 10 plan sponsors believe their employees want guaranteed lifetime income investment options in their employer-sponsored retirement plan. Many plan sponsors are already looking to solve this need for their employees, with four in 10 saying they don’t currently offer guaranteed lifetime income options but would consider it.

 

Consider Options and Secure and Protection Too!

 

With the financial well-being of workers becoming a rising priority in companies of all sizes, plan sponsors across the country are exploring new options. The Society for Human Resource Management encourages: “Being thoughtful about plan design can dramatically improve employees’ chances of accumulating wealth and achieving a secure retirement.” As you investigate design updates, such as adding an annuity option, be sure you also update the protection plan for your business, the retirement plan—and yourself. After all, you wouldn’t want to be on your own in the face of even the allegation of a  fiduciary breach. Imagine suddenly needing an attorney with ERISA expertise, and having to pay $600—per hour—for your defense? Avoid this—and a lot of other stress—with Colonial Surety Company’s affordable Fiduciary Liability insurance.

 

At Colonial, a whole year of Fiduciary Liability coverage is less than what you’d pay for one hour with that lawyer if a crisis hits. Plus, we even include Cyber Liability coverage to protect your business and retirement plan in the event of a cyber breach. Remember, cyber breaches can result in fiduciary breaches too. A cyber breach does not have to be a disaster—but mishandling it is. Choose your affordable plan sponsor protection package here in minutes.

Looking Beyond Traditional Benefits?

Given the competitive job market, businesses are working harder to differentiate the benefits they provide employees. A survey by TIAA revealed that offering annuity options within the retirement plan might be a boost to business efforts to attract new employees:

 

More than 70% of workers say they would choose to work for or stay with a company that offers access to guaranteed lifetime income in retirement over one that does not, TIAAs 2021 Lifetime Income Survey  reveals. So many people are considering career changes, and they are telling us that benefits that extend beyond traditional compensation measures, including access to enhanced retirement savings programs, are critical factors in their searches and decision making,” said TIAA President and CEO Thasunda Brown Duckett. To attract and retain talent employers should ensure they are offering lifetime income solutions in their retirement plans and communicating the benefits they provide.”

The Right Foundation

It’s a good idea to periodically review the company retirement plan and ensure that it benefits employees, providing the options, services, and information they need. It’s also a good idea to make sure that the retirement plan protections are comprehensive—and up to date. Remember, the required ERISA bond protects the assets of the retirement plan from theft; Fiduciary Liability coverage protects you and your assets from personal liability; and, Cyber Liability coverage can safeguard your company and plan from covered losses and expenses in the event of a cyber breach.

 

With Colonial, you can easily and affordably secure this complete coverage package now: Plan Sponsor Package.

Colonial Surety Company is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the country.