The incorporation of guaranteed minimum withdrawal benefits (GMWBs) into defined contribution plans may reduce the level of assets required for plan participants to achieve the same level of retirement income, according to Prudential Retirement.

In a white paper titled “What Employers Lose in the Shift: From Defined Benefit to Defined Contribution Plans … And How to Get it Back,” Prudential says that by pooling the longevity risk of defined contribution participants in annuities with GMWBs, not only do investors receive income for life but more income from the same amount of savings.

As workplace saving will face increasing challenges in the years ahead, plan sponsors benefit as well, Prudential says.“Despite employers’ substantial investors in defined contribution plans, including matching contributions and participant education, many DC participants will not be able to retire when they want without a guaranteed income solution,” said Christine Marks, president of Prudential Retirement. “The incorporation of these guaranteed into DC plans directly addresses the challenges facing individuals and employers today by reducing the amount that individuals must save to achieve a designed level of retirement income.”