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CUSTOM RESEARCH

Unlocking the Potential: The Versatility of Nonguaranteed Retirement Income Products in DC Plans

January 16, 2025

This paper argues that highlighting the versatility of nonguaranteed retirement income products is an effective way to promote these vehicles.

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Nonguaranteed retirement products serve dual functions—they can be offered as retirement income solutions or they can be paired with guaranteed income products to aid participants transitioning into retirement. This white paper, issued in partnership with PIMCO, assesses plan sponsors’ and plan participants’ views on retirement income solutions and explores the evolving role of nonguaranteed retirement income products.

Key Takeaways

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Plan Participants Value Growth and Liquidity

Based on Cerulli’s 2024 research, plan participants prioritize two key retirement income features: the potential for asset growth even after withdrawals commence (24%) and the ability to withdraw funds at their discretion (23%). The key takeaway is having a solution that can simultaneously accommodate both preferences.

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Building a Balanced Approach

Plan sponsors recognize that a “suite approach,” combining guaranteed and nonguaranteed retirement income solutions, can comprehensively cater to participant preferences. A balanced approach recognizes the diverse needs of participants, with some preferring the security of guaranteed income and others valuing the flexibility of nonguaranteed options.

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Implications for Asset Managers

Asset managers do not need to reinvent the wheel to meet the evolving retirement income needs of plan participants. By strategically reframing the messaging around existing nonguaranteed products, they can effectively address participant demands for reliable retirement income solutions.

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Aligning Preferences

Plan participants’ attitudes concerning retirement income features align with plan sponsor motivations for including nonguaranteed retirement income products in their investment lineups. According to the research, plan sponsors prefer products that are liquid, flexible, and simple.

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SUBJECT MATTER EXPERTS

Meet Our Research Team

Idin Eftekhari

Idin Eftekhari

Senior Analyst

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Idin Eftekhari

Idin Eftekhari

Senior Analyst

Idin is a senior analyst in Cerulli’s Retirement research practice, which specializes in the defined contribution (DC) and individual retirement account (IRA) markets.

Prior to joining Cerulli, Idin was a senior member of the Portfolio Evaluation Group at Fisher Investments, where he was responsible for providing asset allocation and benchmark recommendations for high-net-worth clients in the U.S., Canada, and the U.K. During his 15+ year tenure at Fisher Investments, Idin served in multiple roles supporting the firm’s Private Client Group and Institutional Group.

Full biography here.

Adam Barnett

Adam Barnett

Senior Analyst

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Adam Barnett

Adam Barnett

Senior Analyst

Adam is a member of Cerulli’s Retirement research practice, which specializes in the defined contribution (DC) and individual retirement account (IRA) markets.

Prior to joining Cerulli, Adam was a business analyst at Fidelity Investments, where he was responsible for quality control and process improvement in the beneficiary qualification division. Throughout his tenure at Fidelity, Adam served in multiple roles, including participant services with large client 401(k)s and pensions, as well as product training in the defined benefit (DB) space.

Full biography here.

Elizabeth Chiffer

Elizabeth Chiffer

Research Analyst

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Elizabeth Chiffer

Elizabeth Chiffer

Research Analyst

As an analyst on the Retirement team, Elizabeth supports research on the defined contribution (DC) and individual retirement account (IRA) markets and provides quantitative support to Cerulli’s annual reports and Edge series.

Prior to joining Cerulli, Elizabeth was a research assistant at the Boston University School of Hospitality Administration, where she worked on papers pertaining to hospitality finance and technology.

Full biography here.

Mackenzey Santorella

Mackenzey Santorella

Analyst

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Mackenzey Santorella

Mackenzey Santorella

Analyst

As an analyst on the Retirement team, Mackenzey supports research on defined contribution and individual account markets and provides quantitative support to the annual reports and Cerulli Edge series.

Prior to joining Cerulli, Mackenzey interned at Hologic, Inc., and Wheel It Forward. She graduated summa cum laude from Fairfield University with a Bachelor of Science in Business Analytics and minors in Applied Statistics and Marketing.

Full biography here.

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Related Resources

  • Annual report
  • The Cerulli Edge

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