Sandy Koeppel : Business of Benefits

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Sandy Koeppel

Sandy Koeppel, who has more than 35 years of employee benefit law and related experience, primarily focuses his practice on tax and fiduciary issues relating to guaranteed lifetime income plan distribution options . Prior to his retirement from Prudential in March 2011, Sandy was Vice President, Legislative and Regulatory Affairs for Prudential’s Retirement business where he coordinated and helped develop policies, positions and strategies on proposed legislation, regulations and other external issues impacting Prudential Retirement and the retirement industry – with particular emphasis on matters relating to guaranteed lifetime income. Recently, Sandy founded Plan Income Consultants and Evaluation Services, LLC to assist plan sponsors and their financial consultants in their consideration of guaranteed lifetime income as a distribution offering for their plans.

In the spring of 2008, U.S. Secretary of Labor Elaine Chao appointed Sandy to serve a three-year term as the insurance industry’s representative to the Advisory Council on Employee Welfare and Pension Benefit Plans (the “ERISA Advisory Council”).

During his 32 year career at Prudential, Sandy also held the position of Vice President, Relationship Management in Prudential’s Structured and Stable Value Products Group where he had responsibility for the sales and client service function. Prior to joining Prudential’s Guaranteed Products business in 1992, Sandy served as Assistant General Counsel from 1978 to 1992 in Prudential’s Law Department where he was the lead attorney of the Employee Benefits and ERISA practice. From 1976 to 1978 Sandy was an associate in the New York law firm of Fried, Frank, Harris, Shriver and Jacobson.

He is a past chairman of and served on the Pension Committee of the American Council of Life Insurers (ACLI). He has served on the Board of Directors and Executive Committee of the American Benefits Council (ABC); the Stable Value Investment Association (SVIA) Government Relations Committee; the Investment Company Institute (ICI) Pension Committee; and the Government Relations Committee of the SPARK Institute. Throughout his career, he has been active in many industry policymaking activities and projects. Sandy has been a frequent speaker at industry conferences and has authored numerous articles including co-authoring a chapter of The Handbook of Stable Value Investments.

Sandy received his B.S. degree in 1971 from the State University of New York at New Paltz and his J.D. degree in 1975 from Widener University School of Law.

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Articles By This Author

Lifetime Income: It's Financial Education That's The Need and Answer, Says Sandy

by Sandy Koeppel
Posted on August 2, 2012

Well I have to admit I was wrong. About 15 months ago in this Business of Benefits blog I predicted that "Time Had Come Today" for in-plan retirement income solutions to gain traction in DC plans. After all, it seemed like all the stars had aligned for the big turn around in the way retirement plans were perceived. DOL and IRS had tag-teamed on a RFI designed to find ways to facilitate the offering and selection of guaranteed lifetime income (both in-plan and out-of-plan), DOL's ERISA Advisory Council had issued a report containing recommendations for viable regulatory changes to enhance the environment for plan sponsors to offer GLI, the first baby boomers were reaching retirement age and approaching the decumulation phase of their retirement planning, new and innovative guaranteed lifetime income products were now available that addressed the challenges and shortcomings associated with traditional GLI products and more and more recognition and appreciation had emerged for the need to address the risks associated with outliving one's assets.

Unfortunately, it turns out that the status quo persists as plan sponsors continue to be leery/reluctant to offer GLI as an investment alternative or distribution option. My prophetic blunder was aided and abetted by an ever-expanding and burdensome regulatory environment, a continuing weak economy making plan sponsors less inclined to consider enhancements and low interest rates which increases the cost to purchase GLI products. Couple the foregoing with costly compliance concerns and the dreaded "F" word that plan sponsors can avoid by steering clear, it's not at all surprising that what seemed to me like a reasonable time horizon prognostication for widespread acceptance and use of in-plan guaranteed lifetime income strategies. now doesn’t seem anywhere in sight.

That said, the critical need for the certainty and security that guaranteed lifetime provides cannot be overstated. That is something that everyone – short of those who have a contra interest in keeping control of funds – can agree on. See for example. The NY Times “Wealth Matters” (July 27 2012) article written by Paul Sullivan in which he discusses research conducted by the noted behavioral economist Shlomo Benzarti Sullivan says “Shlomo Benartzi, a business professor at the University of California, Los Angeles and the chief behavioral economist at Allianz Global Investors’ Center for Behavioral Finance, said research had shown that most people were incapable of managing a lump sum of money well and that at least half of them got worse at it by the time they turned 80 and their mental faculties declined.” The article provides a well balanced discussion of the pros and cons relating to GLI choices and if you haven’t read it I recommend it highly. Of course the article was written in the context of a defined benefit plan but for the vast majority who need GLI the conclusions are the same (if not even more dire) in the case of most defined contribution plans where GLI isn’t even a choice.

So, let's consider another way to address this issue. Like the overall basis for DC plans in the first place, let's put the responsibility for selecting GLI on participants who bear the risks and ask plan sponsors to merely help participants recognize the need. How? Comprehensive financial education made available to employees by plan sponsors. Retirement planning represents only one of the many critical components that comprise individuals' overall financial plans. And, in this area as we all know, people need help with a lot more than saving for retirement. This includes, but is not limited to, matters as basic as strategies for coping with everyday financial pressures, debt management, buying a home, saving for college, estate planning and, of course retirement savings and investment issues and the important role protection products can offer to address longevity risks, retiree health and long term care needs.

So, after 15 months of pondering, I've now reached the conclusion that the focus must shift from trying to engage plan sponsors about the need for GLI to the need to help participants understand and manage their finances in an increasingly complex investment and financial world. If we take care of providing quality financial education to American workers, thereby helping people make better financial decisions, then it stands to reason that the obvious need for GLI will take care of itself.

Tags: 401(k) Annuitization, Koeppel, Lifetime Income

For Guaranteed Lifetime Income in DC Plans: (ITS) Time Has Come Today

by Sandy Koeppel
Posted on March 23, 2011

But, first, another note of introduction......

It is with great pleasure to announce that my friend and fellow pink-shirted compatriot (many of our industry colleagues may fondly remember THAT story!) Sandy Koeppel has decided to join us as Of Counsel, and to have some fun following his illustrious career at Prudential. Together with myself, Phil Troyer and Conni Toth, we intend to continue to contribute helping make the U.S. retirement system - which we are all so passionate about - work better. Sandy brings a tremendous wealth of experience in guaranteed lifetime income from employer plans to the marketplace (I invite you to read his bio), and intends to continue to carry this torch. Between us all, we offer substantial knowledge of the design, marketing and distribution of these products.

Sandy, as he mentions below, has also formed Plan Income Consulting & Evaluation Services, LLC (PLICES), a consulting firm which has affiliated with this firm and which provides advisors, vendors and employers consulting services related to guaranteed income products.

Drop Sandy a note at sek@rtothlaw.com.

Now, his first blog:

The shift from Defined Benefit to Defined Contribution plans as the primary workplace retirement vehicle has eroded the confidence and jeopardized the retirement security of a vast number of American workers and their families. The recently published EBRI 2011 Retirement Confidence Survey finds that confidence among workers in their ability to have a comfortable retirement has dropped to an all-time low. According to the EBRI survey,

"the percentage of workers not at all confident about having enough money for a comfortable retirement grew from 22 percent in 2010 to 27 percent, the highest level measured in the 21 years of the RCS. At the same time, the percentage very confident shrank to the low of 13 percent." The RCS further states that "56 percent of workers expect to receive benefits from a defined benefit plan in retirement, only 37 percent report that they and/or their spouse currently have such a benefit with a current or previous employer. Therefore, up to 19 percent of workers may be expecting to receive the benefit from a future employer—a scenario that is becoming increasingly unlikely, since private-sector employers, in particular, have been cutting back on their defined benefit offerings."

These findings along with other results of this survey are disturbing and demonstrate that American workers not only are uninformed but feel challenged, concerned, and threatened about potential declines in their future lifestyle in retirement.

With the passage of the Pension Protection Act, Congress recognized the need to instill defined benefit-like outcomes into the defined contribution plan universe. The PPA enables plan sponsors to include in their DC plans features such as automatic enrollment, automatic contribution escalation and gain fiduciary protection by offering qualified default investment alternatives deploying professional money management. These important first steps do much to replicate for workers the defined benefit plan experience in the asset accumulation stage. However, up to now, most DC plans do not offer the critical and essential missing piece to assure retirement security: guaranteed lifetime income. There are many reasons for this failure. Chief among them include: legal uncertainty about the rules and standards that apply to the choice of providers; unsettled tax issues (e.g. applicability of qualified joint and survivor annuity rules) associated with new and innovative forms of guaranteed lifetime income; cost and administrative burdens; lack of demand among participants; lack of guidance from the Department of Labor delineating between advice and education for distribution planning and the availability of out-of-plan (retail) vs in-plan (institutional) guaranteed lifetime income solutions if it is desired.