My apologies to anyone associated with the great 1989 movie Field of Dreams for the artistic license taken with that catch phrase. But it popped into my head talking with an insurance company wholesaler about the penetration rate of annuities in 401(k) plans.

The movie, the actual line in which was "If you build it, he will come,” is such an iconic part of American culture that I’ll skip the synopsis.

So here’s the 401(k) annuity connection. A few months back, I asked whether annuities are The Next Big Thing for 401(K) Plans? I referenced a report from LIMRA Retirement Research (LIMRA) that defined contribution in-plan guarantee assets totaled $2.2 billion as of Dec. 31, 2012.

Certainly off to a slow start as would be expected. It’s obviously too soon to tell the degree to which 401(k) participants buy these annuities. The degree of success, in my opinion, will be how well the industry does in solving the “annuity puzzle.”

That’s the term used by some in the financial industry to describe investor aversion to annuities. They believe that believe people say "no" to annuities because of:

  • A desire to leave a legacy
  • The complexity of annuities
  • A lack of financial literacy
  • An aversion to perceived loss
  • A desire to maintain control

The need for annuities is certainly there, but it remains to be seen how well the financial service industry will deal with both the logic and the emotion of the matter. It’s a tough combination, and it isn’t going to happen in the Home Offices.
Jerry Kalish is an EBA Advisory Board member and President of National Benefit Services, Inc., a Chicago-based third party administrator. He is a Guest Lecturer at John Marshall School of Law LLM Program in Employee Benefits and serves on the Great Lakes IRS Advisory Council for Tax Exempt and Government Entity Plans. Jerry has been publishing The Retirement Plan Blog since 2006. He can be reached via email at and followed on Twitter.

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