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MetLife Retirement & Income Solutions
1. Keep it simple: For plan sponsors wishing to reframe their DC plan as a retirement income program, it is in the best interests of participants to keep it simple. Experience has shown that complexity in the form of too many choices or features in retirement income products often leads to decision-making paralysis, resulting in participants not taking any action.
2. Opt for a single annuity provider model: Simplifying the annuitization process benefits:
3. Allow for partial annuitization: Plans that allow for partial annuitization address a participant’s need to maximize guaranteed income while addressing liquidity concerns. There is a trend among employers to retain assets in the plan to improve their economies of scale while also helping retirees’ continue to grow their savings once they retire. By enabling some assets to remain in the plan, the participant is not faced with an “all or nothing” annuitization decision.
4. Shift the mindset from savings to income: Remind participants the purpose of their savings is to provide income in retirement. Going forward, when providing retirement savings statement balances, be sure to include the estimated monthly equivalent of lifetime income. Illustrating lifetime income during a participant’s accumulation years, instead of solely at the point of retirement, reinforces the need for saving and helps participants understand how their “pot of gold” translates into a monthly paycheck.
DC plans work best when employees understand that income needs to last a lifetime.
5. Educate participants early and often: If participants don’t understand or use their benefits, they will likely place little value on these benefits or their employers for offering them. Developing a foundational retirement income education program is an action sponsors can take now, well before decisions need to be made by participants about converting their accumulated DC account balances (in part or whole) to a guaranteed income stream.
A retirement income education program can help:
6. Take a multi-channel approach to education: Learning about benefits and making financial decisions vary from person to person and from generation to generation. Everyone has different preferences for how they want to engage and learn about their benefits. A multi- channel approach (such as web, email, webinars, mobile, text, social, print, phone, in-person) to communication and education allows participants to feel most comfortable when receiving information. Check your employee benefit communication results to see what works for your employees.
7. Importance of strong customer support for participants: Experience shows that
having strong customer support throughout the purchase journey leads to more
successful retirement outcomes. People need support to understand what they are
buying and, since these are long- term products, need to be reminded of what they
Group annuity contracts are issued through Metropolitan Tower Life Insurance Company (MTL) or Metropolitan Life Insurance Company (MLIC). Like most group annuity contracts, MTL and MLIC group annuities contain certain limitations, exclusions and terms for keeping them in force. All guarantees are based on the financial strength and claims-paying ability of the issuing MetLife company. Contact your MetLife representative for more information.
Any discussion of taxes is for general informational purposes only and does not purport to be complete or cover every situation. MTL and MLIC, its agents and representatives may not give legal, tax or accounting advice and this document should not be construed as such. You should confer with your qualified legal, tax and accounting advisors as appropriate.