“No one wants a mandate," however, mandating that retirement plan sponsors offer guaranteed retirement income should not be controversial, according to Eric Stevenson, president of retirement solutions at Nationwide Mutual Insurance Co.
“Every plan should have at least an option for the participant to choose guaranteed retirement income,” Stevenson told Pensions & Investments on the sidelines of the Milken Institute Global Conference 2025. “It works in everything else that we do … just giving people the choice is a huge first step, and it’s amazing that we haven’t given more people choice in this space.”
In general, much of the debate around a mandate has stemmed from legislation that would require automatic entry into IRAs or 401(k)-type plans.
“I think anything that we can do that we get more people in these plans, we get more plans set up, we get more participation, that’s a good thing,” Stevenson said, acknowledging that while there’s friction, it would help people “have a chance at a successful retirement. So, I’m all for that.”
When a plan participant reaches retirement, they’re often met with a sum of more than $100,000, and they “can’t afford to lose all that money,” Stevenson said.
That’s why Nationwide is an advocate of guaranteed income solutions, which can help retirees manage their money throughout the rest of their lifetime, he said.
Automatic enrollment and auto escalation are two tools the defined contribution system already mandates, so “what’s the friction around doing the same thing” for guaranteed income, Stevenson asked in a May 6 panel at the conference.
SECURE 2.0, the retirement security package passed in 2022, included a provision requiring all new 401(k) and 403(b) plans to automatically enroll new employees and, unless employees opt out, automatically increase their contribution rates until they reach between 10% and 15%, with some exceptions.
Stevenson told P&I there are two main challenges right now: hesitancy from plan sponsors around the safe harbor in SECURE 2.0, and broker-dealers “still trying to figure out their role in this.”
SECURE 2.0 included a safe harbor "for plan sponsors to meet their fiduciary obligations when selecting an insurer through which to offer a 'guaranteed retirement income contract,'" according to an April report from the Milken Institute, in which they collaborated with Nationwide.
“We believe the current safe harbor provisions could be more specific regarding what plan sponsors need to do to satisfy their requirements and be more inclusive regarding their application,” the report said. “It may not be clear how or whether plan sponsors can rely on the safe harbor for lifetime income solutions that are not structured as traditional annuity contracts.”
In addition, Stevenson said that when retirement plans don’t offer guaranteed income solutions, broker-dealers often encourage participants “to roll out and then they’ll offer them solutions outside of the plan.”
However, broker-dealers need to understand it’s “in the best of interest of the participant, and ultimately it’s in their best interest as well, that the money stays in the plan,” he contended.
