Mon, 19 April 2021 | retirement
Initially a vehicle to help Americans save for retirement, 401 (k) plans could become an important source of income for retirees when they stop working, according to the 15th Annual Defined Contribution Consulting Study conducted by PIMCO. Consultants who participated in the survey said approximately three-fourths of 401(K) sponsors prefer to keep participant assets in plan after they enter retirement, up from less than half in 2015. Allowing flexibility in income distribution, adding retirement education/tools and communicating the value of staying in plan, were among the most popular consultant recommendations for plans seeking to hold onto retiree assets.
“Demand for income will only increase as more Americans enter retirement and it is clear from the survey that plan sponsors are changing how they view 401(k)s from what historically had been a vehicle for savings to one that will generate income for participants,” says Rene Martel, PIMCO’s Head of Retirement.
PIMCO surveyed 47 consultants and advisory firms who serve over 33,000 clients with $6.7 trillion in total assets in defined contribution plans as part of the firm’s effort to capture the breadth of views in the industry as well as services available amid rapidly changing demographics of plan participants. Published results were based on responses from firms with more than $10 billion in DC assets under management.
“The survey’s findings reflect the ongoing changes in defined contribution – a pivot to solutions for retirement income, best practices for default fund/target date funds, evaluation of ESG products, etc. – and provide invaluable insights for sponsors and consultants who want to best serve end investors,” says Julie Meggers, PIMCO’s Global Head of Consultant Relations.
Other survey findings:
Source: PIMCO