Navigating Retirement Changes: What Victoria's Secret Employees Need to Know About the Shift from Pensions to 401(k) Plans

Healthcare Provider Update: Healthcare Provider for Victoria's Secret Victoria's Secret primarily uses the Aetna health insurance provider for its employee healthcare benefits. This partnership offers employees access to a variety of health plans that typically include options for medical, dental, and vision coverage. Potential Healthcare Cost Increases for Victoria's Secret Employees in 2026 As 2026 approaches, healthcare costs for employees of Victoria's Secret are expected to rise dramatically due to substantial premium hikes in the Affordable Care Act (ACA) marketplace. Without a congressional extension of enhanced premium subsidies, many employees could face out-of-pocket premium increases exceeding 75%. This perfect storm of escalating medical expenses and potential loss of federal assistance may result in rate increases averaging around 20%, but some states could see increases surpassing 60%. Employees should be prepared for these financial pressures that could significantly impact their healthcare budgets in the coming year. Click here to learn more

Historically, American workers relied on a 'three-legged stool' for retirement income: Social Security, pensions, and personal savings. However, this analogy has always been slightly misleading. At their height, pensions covered less than half of private sector workers, and today, this has decreased to 15%. Government employees, often receiving pensions, typically have lower salaries, especially if they have university degrees.

For Victoria's Secret employees, the current retirement landscape underscores a significant gap between the minimal subsistence offered by Social Security and the uncertain supplement provided by personal savings. There is a missing asset that complements the benefits of Social Security with relatively high security.

The Lack of Personal Annuities

Insurance companies have attempted to fill this gap by offering fixed annuities that convert investment assets into guaranteed payments. While the commitments of insurers are less secure than those of the U.S. government, and money from fixed annuities is rarely adjusted for inflation, they remain less risky than stocks.

Thus, fixed annuities are not commonly used as a retirement preparation tool. They are typically used tactically rather than strategically, serving both as substitutes for bonds or cash (deferred annuities) or as income management tools for retirees (immediate annuities). Although many Victoria's Secret employees are familiar with Social Security benefits and 401(k) plans, few are familiar with fixed annuities.

A significant problem is that investors generally show little interest in fixed annuities. Despite overall sales in the annuity industry, buyers tend to prefer riskier options. For decades, insurers have tried to establish fixed annuities as a third step in the retirement plan, but the market has largely rejected them.

Possible Solution: Employment Assurances

A feasible solution for Victoria's Secret might not lie in the product itself but in its marketing. The complexity of annuities is well known, with several types of annuities—deferred, fixed index, and variable—featuring characteristics that are difficult to explain. Official documents, such as a 112-page prospectus, are often unhelpful.

Annuities can also be offered via 401(k) plans, allowing companies like Victoria's Secret to conduct necessary research rather than recruiting employees. This method has precedents in the success of target-date funds, which are very popular in 401(k) plans but rarely retained outside. A corporate certification could significantly reduce investor resistance, making some of these products more attractive.

The 401(k) sector has gradually moved toward this approach. Legislative changes in 2019 and 2022 legalized the regulatory weight to include annuities in 401(k) plans. Several providers have begun to explore these waters. For example, three years ago, a consortium created Income America 5ForLife. In January, Fidelity launched its pilot program, Guaranteed Income Direct, while in May, BlackRock announced its LifePath Payment series.

Each service operates differently. The Income America and LifePath Paycheck groups add income-withdrawal options to a structured fund setup, albeit in different forms. Fidelity's program offers the chance to annuitize through its current fund rather than proposing new investments. Experimentation within the 401(k) industry may delay adoption due to consumer confusion but could ultimately lead to a robust solution for Victoria's Secret employees.

We can highlight two essential points. First, even though personal annuities can be expensive, workplace annuities will be relatively affordable due to competitive constraints. Secondly, since 401(k) plans must offer gender-neutral conditions by law, workplace annuities are particularly beneficial for women, who will receive the same annual payments as men despite their longer life spans.

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Another Approach: Federal Programs

If corporate leaders at Victoria's Secret turn to the market, researchers often look toward government solutions. Each perspective has contributed to the American retirement system, with 401(k) plans stemming from capitalist concepts and the Social Security system from academic influence. It is therefore not surprising that researchers have suggested federal programs to bridge the retirement income gap.

A notable proposal came from Nobel laureate Richard Thaler in 2019, suggesting allowing 401(k) participants to convert some of their assets into additional Social Security credits. This idea is similar to one by BlackRock, with two key differences: the payments would be guaranteed by the U.S. government and adjusted for inflation.

While this proposal offers many advantages, it also has a significant drawback highlighted by Teresa Ghilarducci from The New School. Since individuals opting for annuitization generally have a longer-than-average lifespan, offering standard payout rates would strain the Social Security Administration by providing higher-than-expected payments—a phenomenon known as adverse selection.

Another notable suggestion came from Nobel laureate Robert Merton and his co-author Arun Muralidhar, who proposed a product called  SeLFIeS : Standard-of-Living indexed, Future income, Single investment. Despite its cumbersome name, the concept is relevant. Investors would commit a specific amount today and receive future payments guaranteed by the government and adjusted for inflation. Unlike fixed annual products, SeLFIeS targets investors from all generations.

In January 2023, Brazil implemented a modified version of SeLFIeS called RendA+ bonds. According to Professor Merton, several other countries, including the United States, are evaluating the outcomes of this program. If Brazil has quickly reformed its retirement system, most countries will likely make a decision much later. Victoria's Secret could benefit from closely monitoring these developments.

In conclusion, none of these solutions bring new funds to the table. Instead, they transfer assets from the conservative part of the retirement system (represented here by 401(k) accounts, although they often include other sources) to a more stable part. We can expect this change, as the same principle applies to pensions, which consume funds that would otherwise contribute to salaries and, consequently, to savings rates.

This article is more descriptive than prescriptive. It presents the problem of the missing retirement leg and proposes various possible solutions, leaving it to the reader, including Victoria's Secret employees, to judge their merits and drawbacks. Future discussions could deepen these evaluations.