Researchers Propose Including Annuities as a Default in 401(k)s

Annua > News > Industry > 2019-Industry > Researchers Propose Including Annuities as a Default in 401(k)s

An analysis found defaulting a portion of balances in deferred income annuities (DIAs) would boost income for retirees later in life, and researchers offered suggestions for implementation by defined contribution (DC) plan sponsors.

By Rebecca Moore

Very few defined contribution retirement plans in the U.S. today pay out lifetime income streams, leaving retirees at the risk of runing out of money in old age. In a report issued by the Brookings Institution, researchers propose to include deferred lifetime income annuities (DIAs) as a default in employer-provided 401(k) plans.

They conclude that defaulting a portion of retirees’ portfolios into DIAs “is a practical and attractive way for plan sponsors to provide a lifetime income for workers in defined contribution accounts.”

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