NAGDCA survey: 27% of government DC plans offer guaranteed income option

Just over one-fourth of government defined contribution plans already offer some form of guaranteed retirement income solution, and nearly half aren't considering adding such an option next year, according to a survey by the National Association of Government Defined Contribution Administrators.

The survey of 79 administrators — primarily at 457 plans — found that 27% of plans offered such an option, 11% are considering offering the option next year and 16% are considering the option but not for next year. Forty-six percent of respondents said they aren't considering such an option next year.

“My surprise is that 27% of those who responded actually have a guaranteed income provision,” Julia Durand, president of NAGDCA, wrote in an e-mail, noting that this is the first time her organization asked its members about guaranteed retirement income products.

“What the data doesn't tell us is what is considered a guaranteed income provision,” wrote Ms. Durand, who also is director of defined contribution solutions for the $152.1 billion California State Teachers' Retirement System, West Sacramento.” We have no way of determining what each respondent identified as a guaranteed income.”

Among those plans offering such an option, 43% of respondents said they didn't know how many participants were using it, while 38% reported that fewer than 1% of participants used the option, the survey said.

“I believe there are still many unanswered questions surrounding these types of products,” Ms. Durand wrote. “I believe a more focused survey would need to be administered if we want to truly measure the understanding of guaranteed income provisions in DC plans and plan administrators desire to include them in the future.”

According to the survey, the reasons most cited by respondents for adding or contemplating the addition of a retirement income product were “industry trends,” the availability of a product from a third-party administrator and “asset retention.”

The survey was conducted in August. Results of the survey are available on the NAGDCA website.