More Employers Consider Annuities for 401(k) Plans

A growing number of employers are planning to incorporate annuities into their 401(k) plans as companies look for ways to provide workers with steady benefits in retirement, according to a survey by Watson Wyatt.


Nearly 22% of employers with defined contribution plans currently offer an annuity as an option and 10% more are considering adding it, the survey found.

"Annuities in 401(k) plans were rarely discussed a few years ago," said 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."

According to the survey, the main reasons plan sponsors don't offer annuities are a lack of demand from participants (56%) and administrative complexity (36%).

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More Employers Consider Annuities for 401(k) Plans