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.  
 
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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.