Despite a constantly evolving macroeconomic landscape, plan sponsors remain firmly committed to providing workforce retirement benefits for the foreseeable future. MetLife’s 2025 Enduring Retirement Model Study, found that eight in ten (82%) of plan sponsors cannot envision a time when their company would no longer offer any retirement benefits.
“In the fifty years since the passage of the Employee Retirement Income Security Act, which was designed to safeguard the retirement, health and welfare benefits of American workers, the institutional retirement space has continued to evolve and mature to address larger macroeconomic trends and meet the changing needs of U.S. retirees,” said Melissa Moore, senior vice president, Annuities, MetLife. “Our study has shown that despite massive shifts in this space, employers remain steadfast in their commitment to providing workplace retirement benefits, including defined contribution (DC) plans and other post-retirement offerings, that help retirees live comfortably after they leave the workforce.”
Continued Commitment to Retirement Benefits
As they contemplate the future of the institutional retirement landscape, a majority of plan sponsors (58%) feel economic conditions like interest rate and market volatility, as well as demographic changes pointing toward an aging and multigenerational workforce (57%), are the market forces most likely to influence how this market will evolve.
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When looking at their own plans, the top three reasons companies plan to continue to offer retirement benefits in the future are to serve as a competitive advantage in attracting and retaining talent (69%), to demonstrate their commitment to the long-term welfare of their employees (57%) and to enable their workers to financially be able to retire (52%).
Retirement Challenges
While they are focused on providing the resources to help their employees retire, employers also see a number of challenges facing older members of today’s workforce. In fact, 90% of plan sponsors report they have workers delaying retirement because they feel financially trapped.
Plan sponsors believe employees may be delaying retirement because they can’t afford to retire yet (64%), they need to maintain medical insurance coverage (62%), or they need to continue building their retirement savings (e.g., 401(k) plan) (49%).
The Roles of DC and DB Plans In Future Retirement Offerings
The most recent significant retirement shift facing employers has been the decline of DB pension plans, paid for by the employer, and the growing domination of the DC plan, the bulk of which workers are responsible for funding. Plan sponsors recognize this and its impact on retirement security—a vast majority, 93%, recognize that retirees need a source of guaranteed income they cannot outlive and 92% say the decline of traditional DB pension plans has resulted in greater reliance on DC plans to provide retirement income.
As a result, respondents reported that the most important choices a plan sponsor can make to help DC plan participants protect their retirement savings is offering retirement income solutions that provide guaranteed income for life (80%) and more than half of plan sponsors, 56%, think plan sponsors should consider repositioning their defined contribution plans as retirement income programs.
“We are already seeing plan sponsors taking steps in the right direction when it comes to offering retirement income solutions,” said Moore. “Two thirds of companies already offer, or are expecting to offer, guaranteed retirement income in the next five years. This includes 35% of companies that report that their DC plan currently has an option that enables plan participants to convert some or all their money into guaranteed lifetime income in retirement.”
When it comes to DB pension plans, plan sponsors face a different set of challenges. The size of the liabilities for a company’s pension plan can be substantial and add volatility to the corporation’s financial statements. Because of this, there is awareness of — and interest in — the ability to de-risk these benefits, with over three quarters, 78%, of plan sponsors saying they have derisking plans for their pensions. Among those considering risk transfer, 97% of them will transfer their pensions, including 77% that will do so will do so within the next five years.
“As a leader in the institutional retirement space, MetLife is well-positioned to take advantage of the trends revealed by the study to drive future growth in our core markets. And, by capitalizing on our unique retirement platform, we will be able to successfully execute the company’s New Frontier strategy and cultivate potential opportunities in adjacent markets,” said Moore. “MetLife’s long history and expertise in offering retirement solutions allows us to play to our strengths and discipline in this market and offer a differentiated approach.”
Source: BusinessWire
