Conning Research: Weakness in Defined Contribution Plans Presents Opportunity for Insurers

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New guaranteed income products can bridge retirement security gap and win assets and fees

(Hartford, CT) October 28, 2008 – Insurers are beginning to seize a unique opportunity to help employees minimize the risks associated with Defined Contribution Plans, such as 401(k) plans, and at the same time compete more effectively with mutual funds, according to a new study by Conning Research and Consulting.

“Traditional pensions, also known as Defined Benefit Plans, are a thing of the past for most Americans,” said Greg Smith, analyst at Conning Research & Consulting. “Employers have replaced traditional pensions with Defined Contribution Plans such as 401(k)s, offering primarily mutual funds for investments. While these Defined Contribution Plans are more flexible, they are also riskier for the average retiree than the Defined Benefit Plans they replace. The risks range from employee non-participation and cash outs to investor errors and market risks. Further, in retirement, Defined Contribution Plan participants must also grapple with longevity and inflation risks.”

The Conning Research study, “Personal Pensions in the U.S.: A New Retirement Planning Asset Class,” presents retiree income needs and risks, and analyzes how life insurers can fill the retirement security gaps in Defined Contribution plans.

“Insurers are beginning to develop products such as Fixed Income Shares and Hybrid Mutual Fund Wrappers for the both the employer-sponsored and individual retirement markets to help employees and consumers purchase guaranteed income for their retirement years,” said Stephan Christiansen, director of research at Conning. “The structure of these products play to the strengths of insurers and may well reduce many of the risks that currently plague retirees. Insurers can win assets from mutual funds and earn fees while creating a new, secure asset class of guaranteed income for retirees.”

“Personal Pensions in the U.S.: A New Retirement Planning Asset Class” is available for purchase from Conning Research & Consulting, Inc., by calling (888) 707-1177 or by visiting the company’s web site at

About Conning Research & Consulting, Inc.

Conning Research & Consulting provides insurance industry analysis to insurers and industry stakeholders. Its published research includes market coverage of 30 segments of the industry in addition to industry forecasting and identification and analysis of major strategic issues. Conning Research & Consulting understands insurance industry challenges and opportunities and provides in-depth analyses on a wide range of industry products and issues. The Conning name has represented excellence in independent insurance industry research for 50 years. Conning Research & Consulting is a division of Conning, a provider of asset management and insurance industry research and consulting services to insurers. Conning is headquartered in Hartford, CT.

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