401(k) Specialist Issue 3 - 2024 - 16

401(k) COVER STORY
contribution plans-allow for Americans
to have the option of receiving a portion
of their retirement savings in the form of
guaranteed income that the worker cannot
outlive in retirement, " McCarthy said. " Proposals
like Q-PON would amend ERISA
and compel plans to offer a menu of payout
options at retirement so that participants can
make better informed choices about how to
spend down their nest eggs. "
The Q-PON proposal, or Qualified
" Whereas ERISA
has been successful
in getting the
American worker to
retirement, we see
ERISA plans evolving
to help the American
worker get through
retirement. "
- Brendan McCarthy,
Nuveen
uals to have an adequate retirement income
so that individuals do not exhaust their
retirement income during their lifetime. "
Brendan McCarthy, Head of Retirement
Investing at Nuveen, told 401(k) Specialist
that ERISA has done a tremendous job of
providing a way for American workers to
save for retirement with more than $9 trillion
in the U.S. 401(k) system today. Now it
needs to help them in their retirement years.
" Whereas ERISA has been successful in
getting the American worker to retirement,
we see ERISA plans evolving to help the
American worker get through retirement,
as 40% of retirees still risk running out of
money in retirement, " McCarthy said.
How can it accomplish this? By enhancing
the ability to attain guaranteed income
in retirement.
" Facilitate the use of institutionally
priced in-plan annuities inside of defined
16
ISSUE 3 2024 | 401kSpecialist.com
Payout Option, is an initiative designed to
enhance retirement security by embedding
retirement income options directly into
retirement plan designs. The proposal aims
to simplify the decision-making process
for retirees by offering options such as systematic
withdrawals or guaranteed annuity
income, at the point of retirement.
McCarthy added that ERISA plan fiduciaries
have always served, and will continue
to serve, in the best interest of their
plan participants. " Where we see evolution
in this role is with respect to fiduciaries
starting to provide greater consideration to
the decumulation-or payout-part of their
employees' retirement needs and offering a
way for their workers to have the option of
pension-like lifetime income through their
existing defined contribution plan. "
The legacy of ERISA, McCarthy said,
is one of accountability for fiduciaries and
ongoing policy evolution. " But it is an evolutionary
time, not a revolutionary time. We
are trying to recreate the benefits of defined
benefit schemes within the defined contribution
system-so lifetime income built into
target date funds and plan defaults, building
retirement assets over time throughout the
multiple careers that the younger generation
is now embarking on, " he said, going on to
list student loan repayment matching and
auto-portability as examples.
McCarthy said Nuveen sees the U.S.
defined contribution system being enhanced
on two other fronts through some of the
legislative changes in both SECURE and
SECURE 2.0. One is further increasing
access to workplace retirement plans, particularly
for small companies-making it easier
for more Americans to save for retirement.
The second is enhancing the ability for
Americans to save more by promoting greater
use of auto enrollment and auto increase
provisions.
Increased Personalization
One of the themes to come out of the
recent LeafHouse National Retirement
Symposium was the dawn of a new era of
personalization, which is being advanced by
growing artificial intelligence capabilities. AI
is being looked at as a gamechanger because
it is making many more data points available,
which can be particularly helpful in personalizing
target date funds and newer offerings
such as advisor managed accounts and inplan
guaranteed income solutions.
" Looking ahead, advice, financial wellness,
and emerging technology like AI are all
driving the future of plan design to be more
personalized to continue to improve participant
outcomes, " Vanguard's Jeff Clark said.
" To address participant needs for assistance
401(k) Specialist Issue 3 - 2024

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