Disconnect: Participants want guaranteed retirement income but Sponsors don’t think it’s an important plan option.

Separate surveys of plan sponsors and participants conducted by Spectrem Group reveal a disconnect between plan sponsors and participants, regarding whether some form of income option should be included in retirement plans.

Overall 2/3 of participants say it is extremely or somewhat important to arrange for a guaranteed amount of income during retirement, while only 12% of plan sponsors agree, and 48% say such an option is not important.

One might contend that participants wanting "guaranteed" income in retirement may not necessarily need or want their plan sponsors to provide annuity or income options.

Preference may depend on income levels. Lower income participants may prefer sponsor provided retirement income vehicles, because they may not have as much access to good outside advisor options. Higher income participants may be less likely to use employer provided retirement income options, because they may be using or have access to outside financial advisors.

Historically, the largest plans have already tended to include retirement options, with smaller plans responding depending on their benefit philosophies. Spectrem's survey measures consumer demand of individual plan participants. Companies choose to meet or ignore this demand, depending on their philosophies.

Retirement plan advisors have an opportunity to help close this divide and provide additional services and products to their clients.

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