Income Innovators: Crafting New Streams of Returns

As defined contribution plans enter a new era, 2026 marks a decisive moment when exploration gives way to execution. IRIC predicts that this year will see plan sponsors and recordkeepers move beyond pilots into widespread scalable adoption of in-plan income solutions. Organizations ready to embrace this pivot will empower participants to craft sustainable lifetimes of income, transforming retirement outcomes.

From Interest to Adoption: The Pivot Point for Plan Sponsors

Over the past several years, employers and consultants have evaluated a growing inventory of in-plan income options. In 2026, that curiosity becomes commitment. Fiduciary evaluation frameworks will standardize selection, allowing sponsors to implement solutions confidently and at scale.

By integrating managed accounts with income features and hybrid target-date funds, plan sponsors will ensure that participants have direct access to secure retirement outcomes without leaving the defined contribution platform.

Unpacking the Five Pivotal Trends Driving DC Plan Evolution

• From Interest to Adoption: Widespread deployment guided by standardized fiduciary frameworks.
• Enhancing the Participant Experience: Intuitive interfaces for comparing and selecting income streams in real time.
• Financial Wellness Reimagined: AI-enabled personalization of income projections and digital coaching tools.
• Expanding Access: Growth of fintech-powered plans, MEPs, PEPs, and state auto-IRA catalysts.
• Policy and Regulatory Evolution: Safe harbors for guaranteed features and inclusion of alternative assets.

Transforming the Participant Experience

Recordkeepers, middleware providers, and advisors are collaborating to create seamless digital platforms. Participants will see real-time conversion of plan balances into income estimates, explore side-by-side comparisons of annuities and withdrawal strategies, and adjust assumptions on the fly.

By prioritizing clarity and simplicity, these solutions not only improve engagement but also build confidence, guiding savers toward choices that align with their retirement goals.

Financial Wellness Reimagined for Pre-Retirees

Employers are expanding pre-retirement programs with next-generation tools. AI simulations will model spending needs, Social Security election timing, Medicare costs, and tax-efficient withdrawal paths. Virtual coaches will provide personalized guidance, making complex decisions feel approachable.

This holistic approach, combining education and technology, cultivates a sense of readiness. Participants will enter retirement empowered, with actionable plans rather than uncertain projections.

Expanding Access: New Workplace Plans

Small employers and gig-economy workers represent a coverage gap that fintech-driven recordkeeping is now addressing. SECURE Act incentives, the rise of Multiple Employer Plans (MEPs) and Pooled Employer Plans (PEPs), and state auto-IRA programs are converging to broaden access.

As a result, more workers will gain the benefit of corporate plan features, including advanced income options, fostering greater retirement security across the workforce.

Policy and Regulatory Evolution: Paving the Way

Regulators are exploring safe harbors for in-plan income solutions, encouraging providers to offer annuities, private credit, real estate, and infrastructure allocations within target-date funds and managed accounts. These developments will lower barriers and expand the palette of return-generating assets.

With clear fiduciary guidance and emerging relief on liability concerns, sponsors can confidently adopt innovative structures that deliver guaranteed or variable income streams.

Innovation Ecosystem: AI and Global Trends

The broader economic context shapes how income innovation unfolds. AI acts as an accelerant, enabling rapid prototyping of participant interfaces and hyper-personalized projections. At the same time, global movements such as tokenization of assets and shifting trade dynamics offer new investment opportunities.

Overcoming Challenges and Mitigating Risks

While the opportunities are vast, challenges persist. Overhyped AI ventures may falter without strong governance. Regulatory uncertainty around alternative allocations could stall product development. And cultural shifts required for adoption demand clear communication and training.

Plan sponsors and providers must establish robust risk-management frameworks, engage stakeholders early, and pilot solutions thoughtfully—turning potential pitfalls into stepping stones for sustainable innovation.

Charting the Path Forward: Actionable Steps for Plan Sponsors

• Adopt standardized fiduciary evaluation frameworks to accelerate decision-making.
• Partner with fintech and middleware providers to enhance digital user experiences.
• Incorporate AI-driven wellness tools for personalized retirement planning.
• Leverage policy developments to include guaranteed and alternative income streams.
• Educate participants with clear, interactive guidance to build confidence.

The shift from exploration to execution demands vision, agility, and collaboration. By embracing these innovations, plan sponsors can transform DC plans into engines of secure, lifetime income—truly crafting new streams of returns for generations of retirees.