Nearly one in four employers (22 percent) that sponsor DC plans currently offer an annuity as a distribution option, and 10 percent of those who do not offer one are considering adding it, according to a recent Watson Wyatt survey. The survey was conducted in March and April 2009, and included responses from 149 employers.
"Annuities in 401(k) plans were rarely discussed a few years ago," says Robyn Credico, a senior retirement consultant at Watson Wyatt. "But in the recent economic downturn, employees without traditional pension plans could not retire because their 401(k) balances were decimated. With this weakness in 401(k) plans now exposed, more employers are exploring ways to minimize their employees' exposure to risk - including the use of annuities."
The survey found that the main reasons plan sponsors did not offer an annuity were a lack of participant demand (56 percent) and administrative complexity (36 percent).
