Retirement-oriented trade groups said the new law will help the industry even though it isn't a panacea.
The safe harbor is "low-hanging fruit," said Aliya Robinson, senior vice president, retirement and compensation policy for the ERISA Industry Committee, Washington. "It's a helpful first step. It will help providers move forward in marketing to sponsors."
Acknowledging that there is "not much demand from participants," she said the law could "create a pathway to providing more education, which could lead to more interest."
Lynn Dudley praised the law for "providing clarity," but she added that it "doesn't solve the problem."
Ms. Dudley, senior vice president, global retirement compensation policy for the American Benefits Council, Washington, said sponsors will want more information about price and terms.
The law "gives the industry an opportunity to be creative," she said. "There will be a lot of innovation in the retirement space thanks to the SECURE Act."
Ms. Dudley predicted that sponsors most willing to offer an in-plan annuity or similar product will be those with experience in offering annuities or those that have defined benefit programs.
"Defined benefit plans have to offer an annuity as a form of benefit," she said. "An annuity is a common benefit form for DB plans so the plan and its fiduciaries have to be able to handle those."
Based on his experience, Robert Melia, the Pennsauken, N.J.-based executive director of the Institutional Retirement Income Council, said benefit managers who have DB as well as DC plans experience will probably be the most amenable to an in-plan annuity for their DC plans.
"I saw it firsthand," said Mr. Melia, recalling that he visited about 75 DC sponsors as vice president of product development for the retirement plan services unit of Lincoln Financial Group, Radnor, Pa. "The ones who were the most receptive (to a Lincoln in-plan product) were those with defined benefit plans."
Employers with DB plan experience "understand the value of pension income, they know their participants are more secure with guaranteed pension income and they know that their plan is a better human resource management tool when it offers guaranteed income," he said.
Mr. Melia said the SECURE Act will help both the insurers and sponsors because the requirements are relatively simple. The sponsors must evaluate the unique demographics of their workforce, the type of annuity and the cost before they act, he said.
Mr. Melia added that fees for institutional annuities will be lower than retail annuities. The latter "by definition have commissions associated with them while institutional annuities offered in the DC market would not pay commissions," he said.
DC consultant Christopher Lyon shared Mr. Melia's optimism about the law's long-term impact even if sponsors choose options that aren't covered by the safe harbor law.
"Over the past year, we have seen a noticeable pickup of discussions of retirement solutions broadly defined," said Mr. Lyon, principal and head of defined contribution for Rocaton Investment Advisors, Norwalk, Conn. He expects a "significant increase" in discussions with clients in 2020 about a broad range of retirement income options.
"This may include a wide array of investment products such as managed payout and target maturity bond strategies (and) managed accounts with a retirement income focus, as well as a variety of tools and education to help participants plan for and manage through the distribution phase," he said.
The law, plus more discussions between sponsors and providers, "will lead to increased product development and more choices — some with annuities and some without annuities," he said.
Retirement income options are "at the top of the minds of plan sponsors," he said. "There's a lot of interest in doing something more for participants with retirement income."