PLANADVISER - May/June 2018 - 45

Rethinking Retirement Plans:
A Flexible Approach to
Providing Lifetime Income
Peter Welsh, vice president, distribution, OneAmerica Retirement Services®
FOR SOME TIME NOW, employers who see the importance
of guaranteed lifetime income for retirees have come up against a
hard truth: traditional defined benefit [DB] plans can provide that
benefit, but they can be too expensive and inflexible. Meanwhile,
income solutions for defined contribution [DC] plans have yet to
be widely embraced. PLANADVISER spoke recently with Peter
Welsh, vice president, distribution, OneAmerica Retirement
Services, about their offering.
PLANADVISER: Why haven't guaranteed income solutions for
the DC market gained much traction?
PETER WELSH: Annuities inside plans create additional fiduciary
risk and uncertainty for plan sponsors. They also limit the
ability of sponsors to switch providers should service issues
arise-and information sharing agreements between providers
don't exist. Finally, annuities inside of plans require an affirmative
election by the participant. With all these challenges, it's
not surprising in-plan annuities have had little success.
PA: What do you see as the better alternative?
WELSH: OneAmerica offers OnePension, which is a flexible
retirement plan design that allows the employer to contribute
to the plan without the constraints of a traditional DB plan.
Assets are fully invested during the life cycle of the plan but
only annuitized at the time when plan participants need it most:
when the employee is ready to retire, they'll have a lifetime
income annuity available to them.
PA: Can plan participants contribute to this type of plan, too?
WELSH: Absolutely! OnePension gives the adviser and plan
sponsor the flexibility to allow for participants to contribute to
the plan, just as they would for other types of DC plans.
PA: How is this approach different than a typical DC plan?
WELSH: Too often, participants reach retirement age with no
idea how to create an income. With OnePension, the participants
know they'll have a steady paycheck after they stop working. And
plan sponsors know that taking care of employees at retirement
could help them retire on time, thus reducing health care, sick
time and other costs associated with an aging workforce.
PA: How do OnePension costs compare to those of a DB plan?
WELSH: OnePension can be considerably less expensive.
Unlike a traditional DB plan, it has no mandatory contributions,
SPONSORED SECTION
no Pension Benefit Guaranty Corporation (PBGC) premiums
and no need for actuarial services.
PA: Can participants predict how much income it will generate?
WELSH: Contributions are fully invested during the life of the
plan. Participants can log onto the OneAmerica website and
use its retirement income tools to estimate monthly income
at retirement.
PA: Do you see this type of plan being used primarily as a standalone
offering, or as a supplement to a 401(k) plan?
WELSH: The flexibility of the OnePension plan design allows
for the adviser and plan sponsor to use only employer money or
incorporate employee contributions. However, the ability for
employees to defer is an almost sacrosanct feature in today's
world, so we would expect the majority of plan sponsors to
choose to add a 401(k) feature.
PA: What motivated you to tackle the guaranteed income
question?
WELSH: As an insurance company, we have offered guaranteed
income solutions for years, which puts us in a unique
position to bring this to the retirement industry. We had an
opportunity to develop an offering that is not only appropriate
for the DC world, but is an option we think retirement plan
sponsors will appreciate. n
OneAmerica® is the marketing name for the companies of
OneAmerica.
Products issued and underwritten by American United Life Insurance
Company® (AUL), a OneAmerica company. Administrative and recordkeeping
services provided by McCready and Keene, Inc. or OneAmerica
Retirement Services LLC, companies of OneAmerica which are not
broker/dealers or investment advisors. Lifetime income is not the only
annuity payout option and the individual should consider with care their
specific needs and financial situation prior to annuitizing.
PLANADVISER - May/June 2018

Table of Contents for the Digital Edition of PLANADVISER - May/June 2018
