Business of Benefits

Business of Benefits

Category Archives: Lifetime Income

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Dodd-Frank and the Annuity Fiduciary Standard

Posted in Lifetime Income
Section 939A of Dodd Frank has a very interesting mandate to federal agencies. It requires federal agencies to review their regulations to determine those which require the use of a credit-agency rating in assessing the credit-worthiness of a security and: “Each such agency shall modify any such regulations identified by the review conducted under subsection… Continue Reading

Zen and The Art of Annuity Regulation, Part 1

Posted in Lifetime Income
In Robert Pirsig’s novel, Zen and The Art of Motorcycle Maintenance, the protagonist was a technical manual writer who went insane.  The author commented that the book had little relation to either Zen or motorcycle maintenance.  But at the core of the story was the minutiae which eventually drove him mad: to any explanation he… Continue Reading

401(k) Distribution Annuities: Its Just Not About “GMWB”

Posted in Lifetime Income
When the insurance industry began seriously developing the "living benefits" under annuity products for the retail marketplace a few years back, I dubbed them as "not your grandpa’s annuity." This is because they were attempting to address the concerns that the market had about traditional annuities, which are seen as irrevocable, inaccessible, invisible and inflexible.… Continue Reading

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

Posted in Fiduciary Issues, Lifetime Income
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… Continue Reading

Opportunity Missed: Obscure IRS Shift Provides Contradiction Instead of Clarity for DC Annuities

Posted in Lifetime Income
The seemingly obscure issue of when a payment from an annuity contract purchased under a Defined Contribution plan is considered to be a "payment from an annuity" is actually one of the most pressing tax issues that needs to be resolved in the area of DC annuitization.  Resolution of this issue determines when spousal consent… Continue Reading

Prudence, not Prescience: A Suggestion for a Fiduciary Standard for DC Annuity Purchases

Posted in Lifetime Income
The question of what the appropriate fiduciary standard should be in assessing the insurer insolvency risk when purchasing annuities by defined contribution plans continues to be a tough one. It is also one of the  critical issues to be resolved if the efforts to encourage lifetime income from these plans is to be successful.  The… Continue Reading

The Annuity RFI: A Rare, Inter-Agency Treat

Posted in Lifetime Income
 EBSA and the IRS issued their long promised Request For Information on annuities-or, should I say, as promised by the EBSA. We had not expected this particular piece to be a joint effort. It shows that Phyllis’s and Mark’s agenda is getting policy effectively done, not engaging in damning bureaucratic turf warfare. Hmm. With this… Continue Reading

IRS PLR Helps Pave the Way for DC Annuities

Posted in Lifetime Income
Annuitization from DC plans suffers from the lack of clarity on a number of key technical rules, which need to be resolved before such annuities can be widely implemented. The IRS has taken a major step in its issuance of PLR200951039, a complex PLR which- for the first time-defines what an annuity really is for… Continue Reading

Continuing the DB Demise Discussion

Posted in Lifetime Income
This where the PBGC, the NIRS and Pension Rights Center (which also presented at the conference) have it all wrong: the traditional DB plan does not, and will not, meet these laudable goal if you rely upon the private employer for the financial wherewithal to insure that the funding will be adequate, and that plan sponsor's own corporate financial needs have not caused some sort dangerous "creative accounting" in the management of these plans which we have all too often seen in the past.… Continue Reading

Private Employer DB Demise Was Inevitable, and Should Not Be Revitalized in Current Form.

Posted in Lifetime Income
The private employer-sponsored defined benefit plan has had a good run of it, supporting two generations well in its goal of providing economic security  for retirees.  But the last 10 years have seen gradual though substantial decline in the number of employers sponsoring these plans, and in the percentage of employees being covered by these… Continue Reading

Addressing Fiduciary Concerns in the Purchase of 401(k) Distributed Annuities: Dealing With The Five “I’s”- Part 2, Inflexibility and Inaccessability

Posted in Lifetime Income
Traditional annuities are inflexible. Period. You get the monthly benefit you pay for. They provide a very valuable benefit which should be part of anyone's retirement planning, but this inflexibility can be scary, as it takes away from the participant the ability to address unexpected contingencies. This fear comes from the second point: the funds used to buy the traditional annuity are gone for good. Other than payments made under a survivor annuity, the traditional annuity doesn't give the participant any access to funds to pay for contingencies, nor does it typically pay a death benefit. So what's a fiduciary to do?… Continue Reading

Can DC Annuities Reduce Risk of Poverty?

Posted in Lifetime Income
I sat sown this morning to follow up with Part 2 of my mini-series addressing the fiduciary risks in purchasing DC annuities (link here to Part 1), when a Plan Sponsor magazine article caught my attention. It spoke of a study which linked  the lack of pensions with the risk of poverty among women and… Continue Reading

Addressing Fiduciary Concerns in the Purchase of 401(k) Distributed Annuities: Dealing With The Five “I’s”- Part 1, Irrevocability

Posted in Lifetime Income
The first element in a fiduciary review is to get at least a layman's grasp on the nature of insurance and insurance regulation. Pooling risks with others is an uncomfortable concept that is foreign to fiduciary with a defined contribution mindset Because of pooling and this "30 year risk," insurance is regulated in ways of no other industry… Continue Reading

Annuity Advocate Appointed to Senior Treasury Post

Posted in Lifetime Income
 Mark Iwry, one of the principals of of the Retirement Security Project, has been appointed as  Senior Advisor to Treasury Secretary Geithner and Deputy Assistant Secretary for Retirement and Health Policy. First and foremost, our heartfelt congratulations to Mark. This is a post well suited to him, and an appointment which will serve the nation’s retirement… Continue Reading

The DC Annuity Fog

Posted in Lifetime Income
It has been a couple of weeks since we’ve last posted a blog, and with good reason. Between Evan, Monica and I, this two month span has us doing some 15 presentations and articles, whie keeping up with clients (and a couple of us squeezing in some overdue vacation time!).  Monica is speaking this week… Continue Reading

401(k) Annuities: “Defined Benefit” Guarantees Using a 401(k) Account

Posted in Lifetime Income, Lifetime Income Published Papers
It is back to the future, in an odd sort of way. There is growing trade press coverage on the interests of 401(k) plans and plan participants on turning a portion of participants’ account balances into a "defined benefit-like" guaranteed income stream. Follow, for example, this link to Plan Advisor.com. There are really two ways… Continue Reading
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