More employers that sponsor defined contribution plans are becoming concerned their employees are not saving enough for retirement and are beginning to raise questions about the efficacy of target-date funds, according to a TIAA-CREF survey.
However, few of the plans offer guaranteed lifetime income options.
In its 2022 Retirement Insights Survey released Wednesday, TIAA said that 66% of employers feel that target-date funds help employees meet their retirement income needs, down from 78% from the previous survey conducted in 2020. Also, a higher percentage (63% vs. 58% in 2020) feels that their employees are "risking outliving their savings."
When asked how interested they are in a new kind of target-date fund that gears toward some kind of allocation of lifetime income, 72% said they are "highly interested," according to the survey.
"Employers are beginning to recognize several critical shortcomings of traditional target-date funds and now seek retirement offerings that safeguard their employees' savings and provide options for guaranteed monthly income for life," said Colbert Narcisse, chief product and business development officer at TIAA, in a news release announcing survey results.
Only 34% of surveyed employers said in the new survey that they currently offer guaranteed lifetime income options, compared with 52% surveyed in 2020, and only 38% said they are even familiar with SECURE Act provisions that improve access to guaranteed lifetime income options in DC plans, compared with 50% in 2020.
The 2022 TIAA Retirement Insights Survey was conducted between Dec. 21 and Jan. 7 with about 500 corporate 401(k) and 403(b) plan decision-makers.
The full survey is available on TIAA's website.
