Life insurers are starting their New Year on the right note with news reported by Bloomberg that the Obama administration is examining the possibility of encouraging Americans to create guaranteed streams of income using 401(k) savings and individual retirement accounts (IRAs.)
Bloomberg reports that the U.S. Treasury and U.S. Labor Departments are preparing to request comment on the concept as early as next week. Request for comment had not been received as of this posting.
When asked for comment, the American Council of Life Insurers, Washington was cautiously optimistic. “We certainly support fully Labor and Treasury's efforts to examine how 401 k plan participants can be encouraged to make annuities a bigger part of their retirement income. We think plan participants should have an option at the workplace to turn retirement savings into a lifetime income stream,” according to Whit Cornman, an ACLI.spokesperson.
Carriers have always provided the option of creating regular income by using annuities. And for the last five years, life insurers have been promoting what they have always offered by under the moniker of income planning. So, conceivably, insurers are poised to step in and help with that conversion should comment be taken and a decision made to advance the proposal. And, over the last few years, mutual funds have tried to come up with products that compete with annuities for income planning dollars.
Hopefully, the Administration ultimately gives the proposal a nod, strong suitability standards will be in place to protect Americans.