Didn’t we all learn to never make the same mistake twice?
The U.S. Department of Labor evidently didn’t.
This week the DOL released another fiduciary-only regulation, which unfortunately mimics an earlier discredited regulation that was struck down by a federal court in 2018.
The previous regulation led to more than 10 million American workers’ accounts with $900 billion in savings losing access to professional financial guidance. But the DOL ignored the harm this earlier version caused for middle-income consumers and charged ahead with this “new” regulation.
The DOL also ignored the extensive consumer protections added in recent years at the state and federal level. Since 2018, 45 states have adopted the ‘best interest of consumer enhancements’ in the National Association of Insurance Commissioners Suitability in Annuity Transactions Model Regulation. More than 90% of Americans currently live in a state that has adopted a best interest standard for annuity sales. These new state laws and regulations also align with the U.S. Securities and Exchange Commission’s Regulation Best Interest.
Importantly, these actions by the states and SEC also align with the will of Congress and the preferences of American consumers. Unlike the fiduciary-only regulation, these measures protect consumers’ access to, and information about, annuities, the only financial product in the marketplace that can provide guaranteed income for life.
In 2019 and 2022, Congress passed with overwhelming bipartisan majorities the SECURE Act and SECURE 2.0, which made it easier for workers to access guaranteed lifetime income as part of workplace retirement savings plans. These bills were signed into law by Presidents Trump and Biden.
Most workers do not have access to traditional pensions anymore. So increasingly, Americans are turning to annuities to provide guaranteed lifetime income. Annuity sales soared to new records the last two years. And according to LIMRA, people are buying annuities mainly to supplement their Social Security or pension income in retirement.
More than 4.1 million Americans will turn 65 each year through 2027, the largest surge of retiring Americans in recent history. The last thing the federal government should be doing now is making it harder for middle-income workers to reinforce their retirement income with annuities.
As ACLI analyzes the DOL regulation and considers next steps, it will keep this key lesson from the earlier discredited rule in mind: don’t restrict Americans’ access to financial security.
Susan K. Neely was President and CEO of the American Council of Life Insurers (ACLI), the nation’s leading trade association determined to help families live better lives by achieving financial security and certainty. As president and CEO, Neely drove public policy and advocacy on behalf of ACLI’s member companies that represent 93 percent of industry assets and serve 90 million families. She is CEO Emeritus through December, 2024.
