Sponsors of 403(b) and 401(k) retirement plans hold divergent views on the value of incorporating guaranteed lifetime income options into their plan designs, according to a survey from TIAA.
More than 4 in 5 sponsors of 403(b) plans, or 82%, believe their participants would be interested in a guaranteed lifetime income annuity compared with 67% of 401(k) sponsors that believe the same, said the study, released Tuesday.
403(b) and 401(k) plan sponsors also differ in how they view the importance of income replacement, with 46% of 403(b) plan sponsors seeing it as the biggest influence on their plan decisions. Only 30% of 401(k) sponsors, in contrast, view income replacement as bearing the greatest weight on their decision-making, according to the survey findings.
Sponsors of 403(b) plans are also almost twice as likely to consider the retirement income replacement ratio and retirement readiness as key metrics to their plans' success, with 41% citing the income replacement ratio and 37% citing retirement readiness as important gauges. Meanwhile, only 21% of 401(k) plan sponsors see the income replacement ratio as a key metric and only 19% see retirement readiness as a key metric.
The survey included 502 plan sponsors and 1,005 plan participants and was conducted Oct. 26 to Nov 20.