It’s Time to Act on Retirement Income Solutions
For years, the retirement plan industry has talked about the need for retirement income solutions (RIS). It is widely agreed that employees should be better prepared for their transition from saving and accumulating a retirement nest egg to creating a lifelong stream of retirement income.
The problem is that despite good intentions, defined contribution (DC) plans have failed to properly replace the retirement income security that had existed under traditional defined benefit pension plans. Since DC plans were introduced in the 1980s, extensive efforts have been made to educate plan participants. Bolstering those efforts, for the past 15 years or so, automated features – including auto-enrollment, auto-escalation, and asset allocation defaults into target-date funds – have become widely implemented. The SECURE Act 2.0 of 2022 will further advance participant retirement readiness with enhanced adoption of these features.