With regard to the DOL’s fiduciary proposed regulations, There is much to like in the new rules; some troubling things; and, perhaps, a mistake or two which will be all flushed out in the coming months. There are a couple of technical points which are worthwhile sharing because they represent what we can expect of the “unexpected” as we work through the changes’ impact. These include the impact on lifetime income , and the application of the PT rules on the purchase of annuities-including QLACs.
Continue Reading DOL’s Proposed Fiduciary Rules May Unexpectedly Open Lifetime Income Door, If…….

In Lifetime Income, ERISA’s statute of limitations may serve to provide the basis for a workable standard when dealing with the long term financial risk posed to fiduciary by insurer insolvency following the purchase of an annuity.
Continue Reading Lifetime Income: Using the Statute Of Limitations to Minimize Insurer Insolvency Risk

 Guaranteed lifetime income from a DC plan requires a contract with a life insurance company. Period. Even if the program is provided by a mutual fund company, a bank, or any other non-governmental entity, insurance companies are the only businesses which can issue to DC plans a contract guaranteeing lifetime income.

Choosing the right insurer

We have been extensively researching, writing on and developing the concept of providing lifetime income from defined contribution plans for some 15 years. The work has resulted in a patent; several major independantly published research papers; the  outlining of some of the important concepts which underline the proposed QLAC regs and its key revenue ruling; and the development of more than one retirement product. If you look closely, you’ll see that that many of the major whitepapers  published on lifetime income are well based on this extensive work we have published. Some of the work really is groundbreaking; for example, we propose  a useful fiduciary process which can be used by fiduciaries in the purchase of annuities, in our NYU paper.

This blog has carried much of that material for the past 5 years, since February, 2009. We’ve now compiled those pieces here for use by  employers, vendors, actuaries, advisers and attorneys who may be struggling to support lifetime income in defined contribution plans.Continue Reading A Useful Compendium of Lifetime Income Guidance for Defined Contribution Plans

In an almost stealth-like way, innovation is creeping into the marketplace and creating ways to address critical retirement issues, even without an incubator. Though these programs can do little to address what I view as the basic retirement inadequacy issue-that is, employers are generally moving away from the traditional notion of building adequate retirement programs into their employment models-they are making progress toward making the best of what we’ve got.
Continue Reading Aggregation Models, Plan Loan Insurance, Lifetime Income Patents: Addressing Retirement Security by “Looking Through the Wrong End of a Telescope”

There are many insurance separate accounts which really are invested like stable value funds from collective trusts, for example. But if it has guarantees of principal or interest-the “guaranteed separate account”-the risk just moves down a level, and the investor in the guaranteed separate account is still subject to an insurer’s insolvency risk. So, instead of the insurer standing up for the value of the guarantees, and how well the insolvency risk is managed and priced into the product, the risk is instead hidden and not discussed.
Continue Reading The “Stable Value” Guaranteed Separate Account; Greetings to the TE/GE Councils Annual Meeting

The growing complication of the ERISA regulatory scheme is causing many retirement plan sponsors to seek some measure of regulatory relief. This, in turn, is the basis for the popularity of MEPs and PEOs, as a number of service providers seek to fulfill this market demand for a new kind of professional fiduciary which address these employer concerns.
Continue Reading Re-Thinking Fiduciary Allocations under ERISA Sections 402 and 405: Back to the Future

I have noticed a curious perception with regard to all of this activity related to 12b-1 arrangements, which gives me some pause. There seems to be a growing sense of entitlement, that somehow plans are entitled to revenue sharing, that there is some sort of innate (and perhaps legal) entitlement plans have to the 12b-1 and service fee payments generated under these programs. It seems that often this is where the conversations begin, and is even seems to be creeping into some of the DOL’s own approach to these things.
Continue Reading Keeping 12b-1 Basics in View When Reviewing Plan Revenue Sharing

The DOL has long treated the revenues sharing programs (such as 12b-1 and sub-transfer agent fees) related to investment funds in the same manner as the SEC:  as an integral part of the funds’ operating expenses. This choice, however, has the side effect of the actual amount of the revenue sharing not ever having to