Seven hundred letters have poured into the Office of Regulations and Interpretations at the Employee Benefits Security Administration, in response to a request for information (RFI) to assist the DOL and the Treasury in determining what steps to take to enhance retirement security for workers in employer-sponsored retirement plans.
The agencies had requested information on lifetime annuities or other arrangements that provide a stream of income after retiring.
In February, the Labor and Treasury Departments sent out the RFI, seeking comments on a broad range of topics, including:
- The advantages and disadvantages of distributing benefits as a lifetime stream of income both for workers and employers, and why lump sum distributions are chosen more often than a lifetime income option.
- The type of information participants need to make informed decisions in selecting the form of retirement income.
- Disclosure of participants' retirement income in the form of account balances as well as in the form of lifetime streams of payment.
- Developments in the marketplace that relate to annuities and other lifetime income options.
The comment period closed May 3, but as Robert Powell for Marketwatch points out, there's no clear consensus and lawmakers could face a tough time crafting new laws or regulations:
Recommended For You
"Some folks want 'em. Some don't. That's the upshot of the 600-plus letters the U.S. Labor and Treasury departments received in response to a request for information about including income annuities as a pay-out option for 401(k) plans," Powell writes. "The various industry groups' comments are predictable. Those in the business of manufacturing and distributing lifetime annuities praised these products as the perfect distribution options; those that don't offer such products didn't. Republicans hate the notion of anything that could become a guaranteed retirement account. And then there were the comments from average Joe Americans, financial advisers, academics and other parties, which ranged the gamut."
The Obama administration launched initiatives as part of his "Supporting Middle Class Families" program to look for ways looking for ways to make 401(k)s and other defined-contribution plans more like defined-benefit plans, which guarantee retirees a lifetime pension. One thought was to require employers to offer annuities within 401(k)s as an option to provide retirees lifetime income.
According to Powell, "some experts see two things happening: First, regulators and lawmakers will likely make lifetime income annuities a distribution option, as they are in other countries, and second, they may tie lifetime income annuities to the existing qualified default investment alternatives (QDIAs)…experts don't see lifetime income annuities becoming a mandated default option.There would be too many hurdles for that to become the law of the land."
Get more: Like Bush, Obama has framed retirement savings as a vital element of economic security. Unlike Bush, Obama's vision is more incremental, building on proposals that have previously garnered moderate support or on regulatory efforts that are already underway. Read more about President Obama's retirement savings initiatives and how they might affect employer-sponsored retirement plans.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
