62 | planadviser.com september–october 2017
Creating a retirement income stream from savings is, in many ways, the most complicated part of working with one’s retirement plan. Studies have shown that
people like the idea of a steady income
stream but are unaware of the products—specifically annuities that they
can purchase to help them attain that.
As plan sponsors consider their options
to give plan participants access to
annuities through the company plan,
advisers are in a position to explain
the “how”s and “why”s.
Tim Brown, senior vice president
and head of life and income funding
solutions with MetLife’s retirement and
income solutions group in Bridgewater,
New Jersey, says advisers who can
communicate how to convert accumulated retirement savings into a lifetime
income strategy or draw-down strategy
add great value to their business with
plan sponsors and participants.
According to Brown, plan advisers,
plan sponsors and providers recognize
that defined contribution (DC) plans
need to be not only a savings plan,
but an income source for retirement.
MetLife’s Lifetime Income Poll of DC
plan sponsors last fall found 85% are
beginning to recognize this.
Offering an annuity makes a defined
contribution plan more closely resemble
a defined benefit (DB) plan—an adjustment the government has been urging
since passage of the Pension Protection Act of 2006 (PPA), says Glenn Dial,
head of retirement strategy at Allianz
Global Investors in New York City.
Regulators have issued guidelines for
including annuities in target-date funds
(TDFs) and for allowing participants to
use a portion of their plan balance to
purchase qualified longevity annuity
“DC plans have many investment
options for accumulating assets for
retirement, but there are few options
for spending down assets in retire-
Art by Wenting Li
Annuities in DC Plans
Advisers can overcome plan sponsor—and participant—reservations