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In-Plan Annuities: The Plan Sponsor Perspective

Matthew Drinkwater, Ph.D., FSRI, FLMI, AFSI, PCS 10/25/2023

Are defined contribution plan sponsors interested in offering in-plan annuities?

Summary

The vast majority of defined contribution (DC) plans have no in-plan option for generating lifetime-guaranteed income for retiring employees. In mid-2023, LIMRA surveyed DC plan sponsors in order to understand their perspectives regarding the in-plan annuity market today, and to identify opportunities for insurers and other stakeholders. Among the questions addressed in the study:

  • What are the characteristics of plan sponsors who offer in-plan annuities (IPAs) compared with those who do not offer IPAs?
  • Why do sponsors offer, or not offer, IPAs? Specifically, how important are factors such as cost, complexity, fiduciary concerns, or participant demand in offering IPAs?
  • What methods have employers used to assess whether to offer IPAs?
  • Is the decision to offer IPAs related to decisions about traditional defined benefit pension plans?
  • What proportion of participants elect to contribute to IPAs when offered – and do employers encourage them to do so?
  • Among those sponsors not now offering IPAs, what proportion are considering doing so, and when will they make their decisions?

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Meet the Project Director

Matthew Drinkwater, Ph.D., FSRI, FLMI, AFSI, PCS

Matt Drinkwater, who joined LIMRA in 1999, leads the annuity and retirement income primary research program. He has led the creation of several major studies of retirement planning, retirement income planning and management, and consumer preferences for receiving advice. Drinkwater has directed several institutional retirement research projects, including studies of asset retention and the rollover market. His research on annuities has encompassed in-depth studies of product features, buyer and owner characteristics, persistency, and living benefit utilization.

He is a graduate of Trinity College (Hartford, CT) and holds a doctorate in psychology from Brown University.

Corporate Vice President, Annuity and Retirement Income Research
LIMRA and LOMA
mdrinkwater@limra.com


For more information, please contact mdrinkwater@limra.com.

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