A growing number of U.S. employers are adding more lifetime-income options to their defined-contribution plans, but they have been slow to offer annuity solutions, according to a new survey.
Thirty percent of employers offer one or more of such options, which is an increase from 23% in 2016, according to the annual Lifetime Income Solutions Survey by management consulting firm Willis Towers Watson.
"An additional 60% of sponsors have not adopted lifetime income solutions but are considering them, or would consider them, in the future," the report added.
The lifetime income solutions being rolled out by employers include education and planning tools to help participants determine how to stretch out savings during retirement and options, both in-plan and out-of-plan, that create steady streams of income from DC retirement plans, the report said.
"Employer concern about their employees being financially ready for retirement has never been greater,” Dana Hildebrandt, director of investments at Willis Towers Watson, said in a prepared statement. “And while many employers are making headway to help workers save more, their efforts to transform individual savings into a consistent flow of income that will last a lifetime remain a work in progress."
Seventy-four percent of respondents adopting or considering the adoption of income solutions said it was because of concern over an aging workforce and increased longevity. That percentage is up from 45% in the firm's 2016 survey.
Increasing retirement readiness was also cited by 74%, while 49% cited a shift from a defined benefit plan to a DC plan as their primary retirement plan for adopting a lifetime income solution.
The survey interviewed human resource and finance executives at 164 large and mid-sized U.S. companies.
Among those offering lifetime-income solutions, 88% offered systematic withdrawals during retirement, 70% offered lifetime education and planning tools, and 44% offered in-plan managed account services.
Only 17% offered in-plan asset allocation options with a guaranteed minimum withdrawal or annuity component, while 15% offer out-of-plan annuities at the time of retirement, the report said, adding that in-plan deferred annuity investment options were also offered by 15% of respondents.