In a thoughtful and comprehensive white paper, DCIIA (Defined Contribution Institutional Investment Association) offers a roadmap and helpful case studies for plans thinking about offering retirement income products. In the coming months, 401kTV will review some of those case studies and dive deeper into some of the issues covered in the white paper.
Retirement income is the third leg of a three legged stool as we shift from defined benefit (DB) to defined contribution plans (DC). Workers have to figure out how much they should be saving, how to invest and finally how to make sure that they have enough to live on for the rest of their life. Some retirement income products manage market and longevity risk which is of key concern.
The DCIIA white paper reviews:
- Support from policy makers
- Tools and resources
- Reasons to offer retirement income products
- Implications of offering these products including
- Fiduciary risk
- Operational issues
- Administrative issues
- Communication strategies
- The business case for offering these products
- Overview of available products
- Case studies
Some companies offer retirement income because they not only want to help employees manage their way to a successful retirement, they want to offer attractive benefits to attract and retain high level talent. But for all companies who think they have shifted all liability to workers when moving from DB to DC plans, the issues remains that workers not able to retire or unsure if the money will last, will inevitably keep working. Companies pay more for older workers’ healthcare and disability costs who may not be as productive and may earn higher salaries, not to mention productivity issues. Offering retirement income products can solve for many of these issues.
Look for more article highlighting case studies from DCIIA’s excellent resource in the coming months from 401kTV.
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