Debunking 5 in-plan annuity myths – and why that matters - Insurance News | InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading From the Field: Expert Insights
Topics
    • Life Insurance News
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Companies
    • Earnings
    • Video
    • Monthly Focus
    • Sponsored Articles
  • Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
Sign in or register to be an INNsider.
  • INN Exclusives
  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • AdvisorNews
  • Washington Wire
  • Regulation News
  • Sponsored Articles
  • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
  • Insider Pro
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
Annuity News
From the Field: Expert Insights RSS Get our newsletter
Order Prints
September 26, 2022 From the Field: Expert Insights No comments
Share
Share
Tweet
Email

Debunking 5 in-plan annuity myths – and why that matters

By Phil Maffei

As inflation eats away at family budgets and more Americans become concerned about outliving their retirement savings, guaranteed lifetime income is popping up on the radar.

Phil Maffei
Phil Maffei

In fact, according to the TIAA Retirement Insights survey, more employees say they are very or extremely interested in guaranteed lifetime income within retirement plans than they were in 2020 (54% in 2022 v. 51% in 2020), and nearly half (48%) say their interest increased during the pandemic.

Employers have taken notice as well. Results from the Retirement Insights survey showed plan sponsors are cooling on traditional target-date funds – the qualified default investment alternative they’ve relied on for years.

Still, some employers have misjudged annuities, a major source of lifetime income, as hard to implement, expensive and unpopular with employees. I want to dispel some of the myths held by employers, focusing specifically on in-plan annuities – those found within defined-contribution plans.

Here are some common employer annuity myths, debunked.

Myth No. 1: Employees aren’t demanding annuities yet.

Fact: TIAA’s Retirement Insights Survey found that 72% of participants consider “ways to obtain guaranteed lifetime income” as an extremely/very valuable benefit; and more than half are interested in an annuity within their employer’s retirement plan.

Myth No. 2: If I decide to remove the annuity product from my menu, I don’t want to risk participants losing the annuity benefits they paid for.

Fact: Today’s in-plan annuity products and providers often have options to allow participants to move their balance and/or benefits so that they may retain guarantees if the plan sponsor removes the annuity product from the menu.

Myth No. 3: If I decide to switch recordkeepers to one that doesn’t offer the same annuity, I don’t want to risk participants losing the annuity benefits they paid for.

Fact: In response to both the SECURE Act and changing consumer needs and preferences, many recordkeepers are now exploring how to support these products. Some have adopted (or are looking into) middleware that makes transitions from one recordkeeper to another seamless.

Myth No. 4: The fiduciary duty expectations for annuities are unclear relative to traditional investments.

Fact: The SECURE Act has laid out a clear set of criteria for fiduciaries to evaluate at the time of carrier selection as well as for ongoing monitoring. This simplifies the insurer review process for employers, negating the need for them to conduct ongoing review of an insurer’s capital requirements, liquidity and solvency.

Myth No. 5: Annuities are too hard to implement.

Fact: Annuities can be added to a plan in as few as five steps. Before beginning, benefits departments must have a frank conversation as to whether they want their plan to continue to simply be a tax-deferred savings plan or whether they want to take the steps to modernize it into a true retirement income plan. If the latter, then the first step is researching and selecting the category of lifetime income solution.

I envision a time, 10 or 15 years from now, when it will be as odd for a retirement plan to not have a lifetime income solution available as it is today for a plan to not have a target-date fund. In-plan lifetime income solutions can put employees on the path to retirement confidence and play a valuable role building retirement security and peace of mind.

Phil Maffei is managing director, corporate retirement income products, TIAA. He may be contacted at [email protected].

© Entire contents copyright 2022 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

Older

Regulators adopt mortality tables reflecting decade of COVID-19 loss

Newer

Study examines how financial advisors can help clients weather market volatility

Advisor News

  • Don't panic over September's market slump
  • Liz Weston: 5 surprising facts about assisted living
  • Fiduciary institute ads take stance against broker dealers
  • How female advisors can help clients navigate uncertain times
  • When clients seek Social Security advice
More Advisor News

Annuity News

  • How annuities optimize retirement income
  • Farmers Life Insurance Co. introduces Harvest fixed index annuity
  • Deviled eggs and FIA annual reset — who knew?
  • 2/3 of employees say student loan repayments will derail retirement plans
  • IRI study: Consumers seek secure income, asset protection
Sponsor
More Annuity News

Health/Employee Benefits News

  • Brown: Increasing Medicaid reimbursement rates not enough
  • How a shutdown would impact key health care programs
  • Whatever happened to Medicare For All?
  • Staff shortages, sale of nonprofits threaten Wisconsin’s Family Care, advocates say
  • NC Medicaid Expansion will launch Dec. 1
More Health/Employee Benefits News

Life Insurance News

  • DOL settles with United of Omaha Life Insurance to reform its evidence of insurability
  • Business owners worry about gaps in insurance coverage, survey finds
  • Phony Crown Point insurance agent sentenced to just over a year in prison
  • Life Insurance Awareness Month: Key points to reinforce with consumers and clients
  • John Hancock launches Premier Benefit IUL
More Life Insurance News

- Presented By -

Top Read Stories

  • What does state-mandated LTCi mean for your clients?
  • NCOIL debates fee caps for public adjusters in proposed model law
  • IRI study: Consumers seek secure income, asset protection
  • Life Insurance Awareness Month: Key points to reinforce with consumers and clients
  • Deviled eggs and FIA annual reset — who knew?
More Top Read Stories >

Press Releases

  • Excellence in Insurance, Sponsored by Insurity, to Recognize 6 Best-in-Class Industry Innovators
  • Glia and Insurity Partner to Enhance Claims Management Process for Customers and Agents
  • Hexure and Paperclip Announce Partnership to Enhance Application Data Workflows
  • Hexure Acquires Vive
  • Senior Market Sales Adds EMG Insurance Brokerage to Growing Network of Health and Wealth Companies
More Press Releases > Add Your Press Release >

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Companies
  • Earnings
  • Video
  • Monthly Focus
  • Sponsored Articles

Top Sections

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • INN Magazine

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2023 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • AdvisorNews

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.
Insurance News | InsuranceNewsNet