Auto-Features Accomplished; What’s Up Next? Retirement income options may be coming soon

You can almost hear the retirement plan consultants ticking the boxes on their to-do lists: auto-enrollments? Check. Auto-increases? Check. With widespread implementation of these features firmly entrenched, the next focus may be retirement income options in 401(k) plans. That’s one of the findings from recent queries of 238 consulting and advisory firms. Roughly two-thirds of the consultants who were asked about the future of plan design said they believe their plan sponsor clients want to retain retirees in their plans. One way to do that is to figure out ways defined contribuiton plans can provide income. They also favor adding distribution flexibility, access to education, and retiree-focused investment options.

Asked what they believe their clients’ priorities would be for 2019, 63% of the consultants placed a review of the plans’ target date funds at the top of the list. Second came an evaluation of investment fees at 44%, and evaluation of administration fees in the number three spot, with 28%.

Although interest in financial wellness programs remains strong, a large majority of consultants participating in the PIMCO DC Consulting Study (https://tinyurl.com/PIMCOnext-up), released April 2019, are unimpressed. At least 74.9% of study participants said the results of such programs are only somewhat effective (74%), 9% stated that they are very effective, and 17% said these programs are not very effective.