Wednesday, September 20, 2023 | DC plan sponsors are seeking retirement income solutions that address key risks participants face in retirement but alsoprovide flexibility to meet participants’ unique needs. However, the variety of options—each with distinctive features—can create a challenge to compare them on a level playing field.
AB’s latest research, Leveling the Retirement Income Playing Field: A Comprehensive Framework for Evaluating Diverse Lifetime Income Solutions, is designed to help. Their framework evaluates potential outcomes for different lifetime income solutions while accounting for their costs and risks—many of which can’t be seen on the surface. And it’s all done through the lens of the individual participant.
Please join us as we discuss these issues to help you along the path of education to implementation. Jennifer DeLong,Head—Defined Contribution, along with Andrew Stumacher, Managing Director—Custom Defined Contribution Solutions, will share insights on what participants want and need in retirement—financial security. Christopher Nikolich, Head of Glide Path Strategies (US) and an architect of AB's research, will present a holistic framework examining these key findings:
• Many participants may run out of money in retirement if they don’t have explicit lifetime income insurance.
• Incorporating insurance into a participant’s asset allocation may improve sustainable withdrawal rates in retirement.
• Certain forms of insurance can produce “side effects” for participants, such as growth opportunity cost and mortality risk.
• A framework to evaluate different income solutions must assess the individual rather than the average participant; measure total costs—not just explicit fees—and consider both income and balances.
• Because insurance enables higher exposure to growth assets, longevity risk can be significantly reduced without an incremental cost, on average, versus a traditional target-date fund.