Only 22 percent of employers offer an annuity as a plan distribution option in their employees' defined contribution plans, a recent Watson Wyatt Worldwide survey found. Additionally, 10 percent of sponsors who don't offer an annuity are considering it.

The main reason cited by employers for not offering an annuity was simple lack of demand among participants. Over one-third of employers were scared away by the product's complexity.

Previous research from the firm found that "employees' interest in life payout annuities is strongly influenced by how the pros and cons of longevity insurance are weighed."

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