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Risks hinder adoption of annuity options in 401(k) plans

Even as workers seek ways to make their retirement savings provide income for the duration of their retirements, employers are hesitant to add annuities…

Word Annuity is spelled out with tiles Retirement plan sponsors are unclear or uncomfortable about the fiduciary implications of annuity offerings.

Even as workers seek ways to make their retirement savings provide income for the duration of their retirements, employers are hesitant to add annuities as options to 401(k) plans.

A report from the Society for Human Resource Management cites the low adoption rate of annuities in retirement plans, with only 8.9 percent of plan sponsors taking any action to incorporate them as a 401(k) option, according to institutional investment consultancy Callan’s 2018 Defined Contribution Trends report. It also highlights a range of reasons plan sponsors provide as hindrances to the adoption of annuity options.

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Marlene Satter

Marlene Satter

Marlene Y. Satter has worked in and written about the financial industry for decades.

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