Retirement Income! There is a lot of activity, and it’s starting to take into account the needs of clients who are about to retire and who have retired for several decades of a new life chapter — finally! Not just a product and profitability focus — a focus on the diverse reality of real lives of ultimate product users. Who is responsible for this?
The inaugural NTSA and NAPA ERISA 403(b) conference in Washington, DC delved into the status of solving retirement income needs for plans, plan sponsors and participants, and whether it is a “big brother” approach, or an enabling of mature flexible choices.
The expert panel that opined on these issues included:
- Mike Doshier, Senior Retirement Strategist, T. Rowe Price
- Elizabeth Heffernan, Head of Partnerships and Consulting Strategy, Micruity
- Bill Hermann, Benefits Investment Committee, AARP
- Hugh Penney, Senior Advisor Benefits Planning, Yale University
- Mike Westhoven, Managing Director – Sales Implementation & Business Development, TIAA
The topic “retirement income” can elicit a range of reactions from stakeholders within the retirement industry. Suffice it to say that there has not yet been coalescence around design, funding vehicles, portability, and other critical components. Is there real innovation, or is this stuck in the “the way we always did it” mentality that while profitable is too easy?
Growing significantly is the desire of plan sponsors to continue their responsibility to participants to offer solutions into the new chapters for their employees. Creating default-like paths similar to pensions, now is in vogue on the distribution side, but, still avoided on the accumulation side. Retirement "security" is taking over for some from the retirement "income" aspect.
Rapid Product Development in Many Flavors
| Product Type | Examples |
| Non-guaranteed |
|
| Income annuity |
|
| Target-date fund with annuity |
|
A T. Rowe Price survey indicates that 75% of top plans are launching such programs. Considering plan sponsor behavior, 85% want the participant monies to stay in the plan, but one-third are not sure how to help, and, so far only 3% have taken action! From a participant behavior standpoint, numbers of those leaving their monies in the plans are growing.
Yale, as a significantly large institution, was able to initiate a “100-year change” with a new QDIA as an accumulating annuity as a fixed income investment, with a custom target date service — and with lower costs. AARP blends financial advice with wellness (loans, spending plans, etc.) so that participants can implement what they want to do. TIAA has developed products and there are many coming in rapid product development.
Kristine J. Coffey, CPC, CPFA, CRES; member ASPPA, NTSA, NAPA, was the 2019 NTSA President.
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