Annuities in 401(k) Increasingly Accepted
Annuities in defined contribution plans are gaining momentum as aging Baby Boomers seek to create guaranteed retirement income streams, according to "Guaranteed Annuities in Defined Contribution Plans," a report from the Financial Research Corporation (FRC).
Reported by Rebecca Moore
Most importantly, FRC says, in order to facilitate more widespread acceptance of annuities within 401(k) products, it is necessary to amend the negative perception of annuities through communication and education at the platform level. The communication needs to be adapted so participants are aware that they are purchasing an income option, because the report findings indicate that these communication and education strategies vary from firm to firm, according to the company.
FRC expects to see strategies evolve as manufacturers and recordkeepers identify successful marketing strategies for both plan sponsors and participants, explaining that, since a framework for these products has been established, new entrants in the marketplace should be able to capitalize on the progress already achieved.