Retirement Industry Trends to Watch for in 2025

A recent report from the Institutional Retirement Income Council (IRIC), a non-profit think tank, shows a growing wave of innovation and solution adoption among sponsors and providers, reflecting improved support of participants’ long-term financial security through an evolution of defined contribution (DC) plans.

According to IRIC executive director Kevin Crain, a critical priority in 2025 is to provide education and industry utilization studies for plan sponsors, consultants and advisors, such as information about the inventory of in-plan options, how to implement options and how to communicate options to plan participants.

“Education about the process can help [these professionals] evaluate, select and monitor ongoing in-plan retirement income options,” Crain said.

Another anticipated evolution is expanded access to workplace retirement savings programs, particularly in the small business segment, said Crain.

“There is a powerful coalition of incentives for small business owners to adopt retirement savings plans. Tax incentives, fully digital plan offerings and employees’ desire to save for retirement are all motivating factors,” he said.

Additionally, since many workers are still struggling with the effects of inflation, employers may increasingly explore ways to take advantage of opportunities to leverage retirement plans to help support both day-to-day finances and saving for retirement.

“Employers will continue to retool their defined contribution plans through implementing various SECURE 2.0 provisions, including emergency savings, student loan repayment matching and lifetime income,” said Beth Ashmore, managing director, retirement at WTW. “We also expect sponsors to expand their perspective around flexibility and choice to determine how best to tailor a groundbreaking new employee choice design to meet their particular needs.”

Examining What’s Ahead

Crain noted the upcoming year will see the acceleration of plan sponsor adoption for in-plan retirement income options. Traditional pensions will become increasingly rare, he said, ensuring retirement income security is a shared responsibility between employees and employers.

IRIC identified several other retirement industry trends to watch for in 2025:

Retirement income solutions at the forefront. Plan sponsors will increase their focus on evaluating and selecting retirement income solutions within DC plans, which broadens the plan sponsor’s responsibility from just accumulation to ensuring participants can achieve long-term retirement security.
Innovative product development. In-plan retirement income product design is generally more effective when it engages a consortium of industry providers: investment firms, insurance providers, plan record-keepers, consultants and middleware technology firms. The industry consortium will continue to design new retirement income solutions and improve how to utilize the solutions. Also, integrated retirement income planning that combines the DC and Social Security retirement income pillars will create a creative product design that bridges DC plan income decisions with Social Security election decisions.
Enhanced participant engagement and demand. Employees are strongly interested in solutions that provide easy-to-understand, reliable and predictable income streams. This growing demand will drive the retirement services industry and plan sponsors to enhance retirement income planning tools and personalize retirement income projections for DC plans and other retirement income pillars. Tools will include using artificial intelligence to engage participants in a more interactive planning experience.
Expansion of DC plan automatic features. The acceleration of adopting new plans (particularly in the small business segment) will expand the utilization of auto-enrollment and auto-increase solutions. The historical success of auto-enroll and auto-increase drives significantly higher plan participation and savings.
Improved financial wellness programs. Industry research continues to highlight that participants need more retirement preparation. Employers feel greater responsibility for helping employees be better prepared for retirement and will continue to enhance their financial wellness programs to include robust pre-retiree education and planning programs.

“IRIC’s analysis underscores a collective effort to transition DC plans from supplemental savings vehicles to comprehensive programs that provide proper retirement security,” Crain said. “By addressing the dual needs of accumulation and de-accumulation, plan sponsors and industry leaders are fostering a more robust and equitable retirement system.”

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