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

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.

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.

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.

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

Elizabeth Chiffer

Senior Analyst

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Elizabeth Chiffer

Senior Analyst

As a senior analyst on the Retirement team, Elizabeth supports research on the defined contribution (DC) and individual retirement account (IRA) markets. She is the lead author of Cerulli's U.S. Retirement End-Investor report, which focuses on the perceptions, needs, and behaviors of DC plan participants. Elizabeth also provides quantitative support to Cerulli’s consulting engagements, annual reports, and the Retirement 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.