It Doesn’t Make Sense to Limit Financial Options

Jan 25, 2022

America’s life insurers believe that all Americans regardless of their race, gender, or economic status  should have access to the knowledge and tools to help them protect their family’s financial future.

Unfortunately, the U.S. Department of Labor (DOL) is considering reinstating a discredited regulation which would make it harder for lower and middle-income Americans to have access to and information about guaranteed lifetime income from annuities. 

As noted in a new White Paper by the American Council of Life Insurers, mandating a fiduciary-only approach for all retirement arrangements will have the unintended consequence of harming lower- and middle-income families who are already behind in saving for retirement and widening the racial wealth gap. A recent study found that if this regulation were reinstated, it would reduce the accumulated retirement savings of 2.7 million individuals with incomes below $100,000 by approximately $140 billion over 10 years.

Now is certainly not the time to make it harder for retirement savers.

Before COVID-19, one-third of Americans had $25,000 or less saved for retirement. Among Hispanic and  Black Americans, nearly two-thirds of Hispanic families and more than half of Black families don’t have any form of retirement savings account, at all. And thanks to the pandemic, half of working adults said it will be harder to achieve their long-term financial goals.

Since the Fifth Circuit Court of Appeals vacated a previous DOL regulation in 2018, a better way to protect consumers has been developed.

The National Association of Insurance Commissioners revised model regulation on annuity transactions together with the Securities and Exchange Commission’s Regulation Best Interest provide a robust framework that protects Americans planning and saving for the future and managing their retirement nest eggs. The Best Interest Standard protects consumers without disenfranchising middle- and working-class families who want access to sound, transparent financial recommendations.  

Financial protections shouldn’t limit financial options. And all retirement savers deserve the right to choose how they pursue financial security. The DOL should not make it harder for middle-income and underserved Americans to achieve financial security.

Andrew Melnyk

Andrew Melnyk is Vice President, Research and Chief Economist at the American Council of Life Insurers (ACLI). He holds a doctorate in economics and is a Certified Business Economist. His functions at ACLI include authoring white papers; managing the production of statistical publications; and managing ACLI’s Research Department. Prior to joining ACLI in 2005, he held positions in academia, government, and the private sector, both in the U.S. and abroad.