States Eye Protecting Guaranteed Lifetime Income Choices for Retirement Savers

Oct 8, 2019

A bricklayer in Hartford. An office worker in Indianapolis. A tour guide in Phoenix.

All three are “X’ing” the days on their respective calendars before they announce their retirements.

They’ve figured out how much monthly income Social Security will provide. And, each wants to use some retirement savings for a lifetime stream of income to supplement Social Security. Creating their own pensions, in other words.

They’re all looking at annuities, the only financial products that can guarantee lifetime income.

It’s a scene playing out across the country – people in different jobs and different places with similar plans, hopes and dreams for a financially secure retirement.

State regulators are moving toward a model regulation that can help ensure they’re all protected. Regulators want to ensure that the financial professionals offering annuities to these consumers are acting in their best interest.

Life insurers support this initiative, as they did when the federal Securities and Exchange Commission (SEC) undertook a similar effort—known as “Reg BI.” As most parts of the life insurance business are state regulated, the National Association of Insurance Commissioners’ (NAIC) activities are vital to enhance consumer protections for all retirement planners and savers.

The American Council of Life Insurers believes the NAIC’s draft model is on the right track. Its strong, consumer-focused framework aligns well with the SEC’s Reg BI, promoting a harmonized standard of care across regulatory platforms that will enhance consumer protections.

The NAIC may approve the model by year-end, with states expected to begin adopting it in 2020.

It will have its critics.

Some will be from an industry segment that wants no change to current regulations. Other critics will promote a “fiduciary standard” that could jeopardize for the very people they purport to represent – low and moderate-income Americans – the long-term guarantees they want and need.

The bricklayer in Hartford, the office worker in Indianapolis and the tour guide in Phoenix deserve more consumer protections than exist today. The times demand it.

They need retirement plan choices as well. Annuities help provide it.  

A model regulation adopted in all 50 states would help guarantee them both.

Jack Dolan

Jack Dolan is Vice President, Public Affairs at the American Council of Life Insurers (ACLI). A former journalist and Capitol Hill aide, he joined ACLI in 1991. He has represented ACLI in print, broadcast and online news outlets on a wide range of financial and retirement security issues facing American families.