“Other hurdles like little brand recognition, lack of strong products, lack of robust narratives around guaranteed income, and detachment from end consumers force insurance companies to accept a minor role in the growing rollover market,” LIMRA said.
Also driving IRA rollovers is the fact that most American workers are at the tail end of the transition period from pensions to defined contribution plans they themselves have to annuitize, according to survey data from the Investment Company Institute.
The ICI survey found that traditional IRA owners cited multiple reasons for rolling over their retirement accumulations, including avoiding leaving assets behind with a former employer (64 percent), preserving the tax treatment of the savings (60 percent), consolidating assets (54 percent) and having more investment options (54 percent).
The ICI also found that 58 percent of traditional IRA-owning households, or 19 million households, indicated that their traditional IRAs contained rollovers from employer-sponsored retirement plans in 2018.
One-third of U.S. households owned IRAs in 2018, ICI found. More than eight in 10 IRA-owning households also had accumulations in employer-sponsored retirement plans. More than 60 percent of all households had either retirement plans through work or IRAs, or both.
Most traditional IRA-owning households have a planned retirement strategy, according to the ICI. Nearly two-thirds indicated they have a strategy for managing income and assets in retirement.
In 2018, the majority of IRA-owning households had incomes less than $100,000. Forty percent had incomes between $35,000 and $99,999 and 12 percent had incomes less than $35,000.