08.16.18
Groups Question Efficiency of Offering Annuities in DC Plans
by: Rebecca Moore
The Plan Sponsor Council of America (PSCA) said valid retirement income strategies encompass both annuity and non-annuity approaches. It noted that it specifically rejects new mandates, saying that a mandate runs counter to the significant level of flexibility participants already have with regard to their individual account retirement savings plans—401(k), 403(b), 457(b) and/or IRAs. The PSCA recounted 2005 testimony it gave in which it noted that the baseline of retirement income provided to most workers is Social Security, and it said “there is no evidence that participants who choose not to purchase annuities through their plan (or via an IRA purchase) when they retire are harming themselves.” “Little has changed in the past 13 years,” the PSCA said. “Participant preferences have not changed and are reflected by single digit annuity take-up rates—a level of interest that, for many, perhaps most plan sponsors, does not justify the administrative cost or fiduciary risk involved in offering an in-plan annuity.”
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