Providing Lifetime Income In A DC World: The Long And Winding Road

“Our research suggests that DC plan advisors, consultants, and plan sponsors have reservations about in-plan annuities. Generally, in-plan lifetime income options are expensive, complicated, resource-intensive, hard to explain, not flexible, not portable, and uncertainty about fiduciary duty may linger…”

From a special report on Retirement Income by Pensions & InvestmentsMarch 11, 2024

“BlackRock’s LifePath Paycheck looks and feels like its existing index target-date fund. However, LifePath Paycheck gives participants the option to convert part of their assets into a lifetime income stream, starting at age 55. BlackRock has a robust process for choosing the insurance company that will provide the annuity, thus alleviating that burden from the plan sponsor.”

From an article on new products in PLANSPONSORFeb. 29, 2024

“The award-winning Lifetime Pension helps you enjoy life without worrying about your savings running out. It was the first of its kind in Australia and is designed to work together with your Retirement Income Account. The Lifetime Pension provides market-linked income that is annually adjusted.”

From the website of the Australian Retirement Trust

Are We There Yet?

This Letter provides an update on traveling the long and winding road to the provision of lifetime retirement income to private sector workers in addition to basic universal government pensions. The need for a simple cost-effective solution is well-established. For example, a recent US study found only 21% of workers believed they were accumulating sufficient retirement assets to maintain their standard of living in retirement. The fear of outliving one’s retirement savings was obviously strong. Yet, at the same time, another study found that in a sample of people retired for 20 years, a majority still had most of their pre-retirement assets left.ⁱ Clearly, that ‘outliving your assets’ fear continued to be strong during the retirement years, leading to scrimping and underspending, rather than enjoying life after work.