ASPPA, AARP and WISER  are taking the bull by the horns and, rather courageously, are putting representatives from the mutual fund industry and the annuity industry together on panels in the "Lifetime Income Summit" to be held on May 21.

The agenda promises to be an interesting one. An insurance industry representative will chair the mutual fund panel on lifetime income, while a mutual fund representative will chair the insurance industry panel.

Both have much to learn from each other in this discussion, and I do hope they do listen. The industry responses to the DOL’s and IRS’s RFI on lifetime income show the continuing stark division between these two industries: Insurers, of course, love the thought of a retirement policy which favors lifetime guarantees from defined contribution plans;  with the mutual fund industry taking the stance that such is not needed from DC plans.

Both should take a closer look at their positions, as their economic self interests actually can align well here.  While it is true that only insurers have the legal ability to pool interests and actually provide guarantees, it is the mutual fund industry that has the products that make these guarantees attractive.

Participants love accumulating wealth in mutual funds, and even where annuity contracts are used for accumulation, the investment funds in those annuities are managed by mutual fund investment managers. But participants also love the security that only a pooling of interests can provide.

Folks from these two industries really need to scrap their historical stance on this issue, as its beginning to look a lot like a fight for the sake of a fight.  Plan and plan participants need investment products which can best be had by cooperation by these two groups-they should work together to find ways to embed guarantees in mutual funds; modify regulations to allow guarantees on DC plans that allow continued equity exposure; to find ways to allow participants a safe way to purchase insurance in DC plans to preserve a chunk of their mutual fund gains; and other assorted designs.

Forget about bickering about annuities. Find ways to allow plan participants the best of both worlds, combining the good guarantees with the good investment funds as a way to help provide their customers a chance for a secure retirement.







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