Retirement Income Products: What Lies Ahead

A new year is under way. What may it portend for retirement income products? A recent analysis takes a look at what may be ahead in 2019.

In “Top 4 Trends Shaping Retirement Income Products in 2019,” a BenefitsPro blog entry, reporter Nick Thornton discusses four conditions that experts from the Institutional Retirement Income Council (IRIC) think could hasten the implementation of retirement income products in 401(k) plans this year.

IRIC expects that more plan sponsors will consider such products and solutions in 2019. Thornton observes that IRIC has found that $1 billion flows from defined contribution accounts every day, fueled by the accelerating retirement of employees born during Baby Boom. And he adds that IRIC Executive Director Bob Melia thinks that plan providers are more motivated to staunch the flow with in-plan income solutions.

Thornton says that IRIC has identified four factors that will be behind this development.

Retirement Legislation. IRIC noted that there were a variety of bills related to retirement plans in play on the Hill as the 115th Congress came to a close. Thornton reports that IRIC “expects the Retirement Enhancement Savings Act, the Family Savings Act and the Automatic Retirement Plan Act to gain additional attention in the 2019 legislative agenda.”

The Stock Market. IRIC says that volatility in the stock market in 2019 could increase demand for guaranteed income products and other kinds of investments, such as stable value contracts, deferred annuities, guaranteed income benefits, alternative funds, real asset funds and products that “offer downside protection.”

Industry Consolidation. The flow of money from DC plans, as well as less assets under management, will pressure record keepers to protect their bottom lines, IRIC expects. And that, in turn, could result in more widespread use of guaranteed income products and more assets staying in a plan.

Retirement Security Broadens. The discussion of retirement security now incorporates consideration of health care expenses, Thornton notes. And part of that trend, IRIC says, will be for the pairing of health savings accounts (HSAs) with DC plans to continue.