PLANSPONSOR - November/December 2024 - 2

INSIGHTS
PUBLISHER: Alison Cooke Mintzer
alison.mintzer@issmediasolutions.com
A Universal Challenge
I
was recently in Australia visiting our Sydney-based
media team. It likely isn't a surprise to you that folks
Down Under are also trying to find, and explain,
solutions to the complex problem of creating income
in retirement. Our Financial Standard brand hosted
its Retirement Income Forum while I was there, and
many of the topics-e.g., demographics, retirement
risks and product solutions-aligned to the editorial
topics and agenda items at our own PLANSPONSOR
National Conference in June.
The reason it was interesting for me to see so much emphasis on solving the
retirement income problem is that, for much of the rest of the world, the Australian
Superannuation program is often seen as one to emulate. It mandates savings levels,
supported by employers, but with individual direction of investments. So, yes, people
accumulate a pot of money, but because there is no defined benefit component to it, they
still have to sort out how to turn that savings into a retirement paycheck.
It's thus worth noting that, even for those who have seemingly " figured out " accumulation,
the issue of decumulation sits atop the industry as a big unknown. This is the
quest for everyone in a defined contribution system, and I think the future of the industry
unfortunately will be harmed if we're unable to solve the issue that vexes most of us.
For plan sponsors, in 2025, the issue of creating income in retirement will likely
continue to grow in importance as plan participants look to you for information. There
has been substantial development in product solutions by insurance companies and
investment managers, providing choices previously unavailable.
However, I understand from speaking to many of you that you still have many questions
as to how to select a product and as to communicating guidance to participants
about what they should do with their savings. So, without selecting a product for your plan
lineup, there are some things you can do structurally to support your plan participants in
transforming their account into a paycheck.
Overall, it helps when projecting which options will best create income if participants
have a consolidated view of their savings. Plan sponsors can consider ensuring that
their plan allows for rolling in past account balances and developing a communication
plan to show employees that they have that ability.
Plan sponsors can also work with their recordkeepers to learn what options are available
in the plan for participants to access and to take distributions from after retiring
or exiting the employer. As I've written about in recent columns, there still seems to be
much work to do to enable participants to take plan distributions in a way they'd like,
whether from select participant investment options or Roth vs. pre-tax buckets.
There are also ways that you can facilitate access to guaranteed income outside the
plan lineup without selecting a single provider. For example, the Income Solutions platform
is one that gives participants a window to institutionally priced annuities from
multiple insurers.
In Sydney, a TV ad from the company Aware Super-one of Australia's large superannuation
funds-emphasized its ability to help savers create income, and I found the ad
simple but effective. It said something like: " The working life ... You wake up, you work,
you get paid, you wake up, you work, you get paid ... until one day you wake up and still get
paid ... " That's obviously the dream. With your assistance and communication with your
platform partners, you can help employees get closer. -Alison Cooke Mintzer, Publisher
2 PLANSPONSOR.COM November - December 2024
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