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Unemployment Insurance Income Replacement Rates

Posted on July 2, 2020 by No Author -

In robo deal, Empower pays $1 billion for Personal Capital

Posted on July 2, 2020 by Editorial Staff -

Empower Retirement, second only to Fidelity as a U.S. retirement plan provider, has acquired Personal Capital, the hybrid human-and-digital investment advice platform.

Empower will pay “up to $1 billion in enterprise value, composed of $825 million on closing and up to $175 million for planned growth,” according to a release this week.

In Personal Capital, Empower acquires an advice platform that has “added over 2.5 million users on its platform, tracking over $771 billion of household assets” since its founding in 2009, the release said.

“There are few modern wealth management platforms that can deliver personalization at scale direct to the consumer,” Personal Capital co-founder Rob Foregger told RIJ this week. “They’re hard to build and hard from an execution standpoint. And it’s not easy to do the marketing and to build a national brand.

“Personal Capital brings together all the pieces,” he added. “There’s a scarcity of pure-play platforms that can drive this technology. That’s one reason why Empower made this acquisition, and why these types of acquisitions will continue.”

The COVID-19 pandemic will accelerate the digitization of professional services, bringing it to maturity about five years sooner than the financial services industry expected, Foregger said. “Changes in the financial industry that were underway but still 10 years from taking full effect, are now on top of us.”

NextCapital, a sibling company to Personal Capital, remains independent, Foregger said. NextCapital is an advice platform that enterprises can provide to their clients under their own brand, in a “white-label” relationship. Such enterprises include 401(k) plans, broker-dealers, Registered Investment Advisors, and other retail financial businesses.

After the close of the transaction, Personal Capital will be branded as “Personal Capital, an Empower Company.” It will continue to provide its financial tools and investment solutions to clients. Personal Capital CEO Jay Shah will serve as president of Personal Capital, the release said.

Shah will report to Empower CEO Edmund F. Murphy III, and join Empower’s executive team. A joint team from both enterprises will work together to integrate the Personal Capital and Empower offerings. The transaction is expected to close in the second half of 2020.

Sullivan & Cromwell LLP served as legal counsel and Morgan Stanley & Co. LLC and Rockefeller Capital Management advised Empower. Willkie Farr & Gallagher LLP served as legal counsel and Moelis & Company LLC served as financial advisor to Personal Capital.

Fresh from Midland National and DPL, AllianzIM

Posted on July 1, 2020 by Editorial Staff -

A versatile fee-based FIA from Midland National, on the DPL platform

DPL Financial Partners and Midland National Life Insurance Company are introducing a new commission-free fixed index annuity (FIA) with a “health-activated income multiplier” feature.

The contract is called Midland National Capital Income. Contract owners can receive double income payments for up to five years “to help prepare for increased personal care costs.” Capital Income will be available exclusively to DPL’s RIA member firms by the end of July 2020.

Policy-owners who can’t perform two or more of the six basic activities of daily living (bathing, continence, dressing, eating, toileting, and transferring in and out of beds and chairs) can turn the rider on. It is not intended to replace long-term care insurance.

The multiplier is a feature of the product’s guaranteed lifetime income rider, available for a rider fee of 1% per year; it can be dropped after seven years. There’s a seven-year surrender period with a 6% first-year penalty for withdrawals of more than 10% of the account value.

A waiting period and an elimination period are among the conditions and limitations on the benefit, the companies said in a release. There’s a three-year waiting period after the purchase of the contract, and a three-month waiting period after switching on income.

The older you are when you buy the contract, and the longer you wait after buying the product to start income, the higher the annual annual payout percentage. According to the product brochure, for example, a 65-year-old single contract owner could take lifetime income of 5% per year. The rate would go up to 5.75% if he or she delayed income until age 70. Payouts for couples are a bit less.

According to the product rate sheet, the contract currently offers a fixed-rate account paying a guaranteed 2.75% per year. There’s a market-value adjustment for excess withdrawals. The minimum investment is $20,000.

There are two annual point-to-point crediting strategies offering exposure to the S&P500 Index (without dividends). One has a 5.25% cap, the other has a 35% participation rate and an “index margin” of 2%.

There’s also uncapped annual point-to-point exposure to the Fidelity Multifactor Yield Index 5% ER, “a multi-asset index, offering exposure to companies with attractive valuations, high quality profiles, positive momentum signals, lower volatility and higher dividend yield than the broader market, as well as U.S. Treasuries, which may reduce volatility over time.”

New rates for Allianz buffered ETFs

Allianz Investment Management LLC (AllianzIM) has announced new caps and buffers on the structured exchange-traded funds that it introduced in June and which trade on the New York Stock Exchange, an Allianz news release said. The new rates are valid from July 1, 2020 to June 30, 2021.

There are two versions of the ETF: the “U.S. Large Cap Buffer10 Jul ETF” (NYSE Arca: AZAL) and the “U.S. Large Cap Buffer20 Jul ETF” (NYSE Arca: AZBL). Both have begun trading on the New York Stock Exchange.

AZAL has a gross 10% buffer and a gross upside cap of 16.1%. AZBL has a gross 20% buffer and a gross upside cap of 8.8%. The net buffers and caps are 0.74% lower than the gross, reflecting the 0.74% annual expense ratio.

The net return will also reflect brokerage commissions, trading fees, taxes and non-routine or extraordinary expenses. The cap and buffer experienced by investors may be different than the stated numbers, the release said. The funds’ website, at www.allianzIM.com, provides additional fund information and information relating to the potential outcomes of an investment in the funds on a daily basis.

Accessible to retail investors via the New York Stock Exchange, AllianzIM Buffered Outcome ETFs are also available to advisers through Halo Investing, Inc.’s (Halo) global technology platform.

Should Nursing Homes Be Closed?

Posted on June 30, 2020 by Jack Cumming -

Many senior-living executives advanced in the industry by qualifying as Nursing Home Administrators. That has tilted the industry toward caring for the frail more than celebrating the capable. There are different kinds of nursing homes, ranging from small board and care homes, to proprietary nursing homes specializing in Medicaid, to the care facilities in Continuing Care Retirement Communities (CCRCs).

Life in a SNF

CCRC residents are sometimes seen as embarked on a life journey that ends with confinement in the Care Center, as CCRC nursing facilities are often termed. That is no longer seen as a desirable place to spend one’s final days. Sharing a room and a bathroom with a total stranger, who may have annoying habits, is not an outcome that anyone would want.

The COVID-19 pandemic has led to a media focus on Skilled Nursing Facilities (SNFs) as disease-prone concentrations of vulnerable people. Estimates have suggested that as many as one-third of all COVID-19 deaths may occur in SNFs. This, of course, ignores the death rates in hospitals. As one wise person said, “Have you ever thought about what a privilege it is that your residents have chosen to die in your community?” The recent negative publicity may be unfair, but it is a new public awareness reality with which senior living operators must cope.

Some of what media reports present as “excessive” deaths may be no more than hospice patients, for instance, choosing to forego treatment. Thus, many of the SNF deaths may be among people who were likely to die soon in any event, but for whom COVID-19 has merely accelerated the inevitable.

Who’s to Blame?

LeadingAge’s Katie Smith Sloan recently courageously pointed to the failure of our national leaders to give priority to shielding nursing home workers with adequate Personal Protective Equipment (PPE). The nursing home industry has not been as effective as have hospitals in making their plight known. One reason may be the artificial distinctions that prevent the trade associations – LeadingAge, American Senior Housing Association, and Argentum – from speaking with a shared voice. A secondary reason may be that their voice is less compelling due to the absence of residents and their family members in trade association policy councils. AARP has demonstrated that true grassroots support weighs heavily in Washington.

Nevertheless, as the National Institutes of Health’s respected spokesman, Dr. Tony Fauci, said recently, now is not the time to be assigning blame. Now is the time to address the common foe with all our strength, with all our will, and with all our capacity. That the media have chosen to single out nursing homes and then to assign blame to their proprietors has not been helpful. Moreover, it shows a journalistic superficiality that is unworthy of those who are given authority to shape public opinion in a democracy. Still, unjust publicity is not the only challenge confronting nursing homes. They face financial challenges as well.

Do We Need SNFs?

Financially, licensed SNFs are eligible for short term Medicare reimbursement benefits. Downward pressure on reimbursement rates makes it increasingly difficult to cover the cost of quality care. Thus, it’s not surprising that, even before COVID-19, many CCRCs were delicensing their SNFs and converting them into more homelike high-acuity assisted living. Most needs calling for a SNF license can be provided in that more inviting setting if there is competently licensed staff.

Without a skilled nursing facility, senior living operators won’t need to have a licensed Nursing Home Administrator. The focus can shift to ensuring that what seems like an attractive home for life remains just that.

Trend Away from SNFs

A trend away from skilled nursing began before COVID-19. A 2018 CBRE (Coldwell Banker Richard Ellis) study concluded: “Telemedicine and other technological advances in the delivery of health care are keeping seniors with significant health-care needs in non- nursing care environments longer.” COVID-19 has accelerated the adoption of telemedicine, so it is likely that the decline of licensed SNFs will continue.

A two-stage assisted living approach can allow CCRCs to provide a more integrated care response. Generally, skilled nursing staff are not allowed to respond to independent and assisted living residents if an emergency develops, say, in the middle of the night. That can lead to expensive and unnecessary transports to emergency rooms. Effective telemedicine, however, can connect remotely with emergency room physicians, who can determine whether transport is needed or not.

What Happened?

Criticism of nursing homes is not new. During the 1980s, there was a move toward privatization, which spurred the expansion of proprietary skilled nursing homes. A 1986 study titled “For-Profit Enterprise in Health Care” from the Institute of Medicine decried the prospect of substandard care. Some proprietary SNFs have been characterized as greed-motivated, suggesting that profit takes precedence over patient welfare. That unsavory perspective may now have tainted the entire industry.

The COVID-19 crisis is accelerating many business trends. The time may be now when senior living operators need to decide whether it is wise to continue. It’s hard to make a case for continuing a care model that can result in losses, especially when serving needy Medicaid patients. Now that financial challenge is exacerbated as nursing homes are seen as hazardous for the welfare of those served. It’s possible that hospitals will offer SNF-type services in separate facilities on their campuses, or that specialized operators may be able to scale SNFs to be viable. If so, those who no longer provide SNF services as part of their portfolio can contract with others to meet those needs.

Why Is Income Planning So Hard?

Posted on June 30, 2020 by Kerry Pechter -

Bill Sharpe, who won a Nobel Prize for co-creating the capital asset pricing model, called retirement income planning the hardest financial problem he has ever tackled. It’s clearly different from other types of financial puzzles.

On a personal level, the pre-retirement “accumulation stage” might actually be more stressful. Financially, it involves earning, saving and investing; borrowing and re-paying; buying all kinds of insurance. Plus parenting. That entails a lot of stress. People are least happy at mid-life, research shows.

Then comes retirement. It’s not all that bad. Medicare and Social Security benefits begin. Mortgages, loans, and credit card debt have melted away, ideally. Paydays end but deferred income or pensions may begin. Many people dread retirement until they dive in. When they do, the water feels surprisingly good.

So what makes retirement income planning so difficult—for adviser and client? Well, it’s different from the accumulation stage. The risks are different, for one thing. Longevity risk (living too long) replaces mortality risk (dying too soon). “Sequence risk” (selling depressed assets for income) looms larger than market risk (volatility). Those “deferred” income taxes start to come due. Risk capacity supersedes risk tolerance or risk appetite.

For many people, these changes demand a new approach to money management. Your clients probably won’t know that the rules of the game have changed. They’ll rely on you to guide them through an unfamiliar financial landscape. To maximize your value to them, you may need to make a few mental adjustments yourself. For instance, creating plans that involve investments and insurance can be challenging if you’re not used to it.

Blending investments and insurance

At RIJ, we believe that a combination of the two can create financial synergies for the client. But most advisers, by personal and professional history, are grounded in either the investment or the insurance world. Investment specialists may find it awkward to “frame” the role of insurance products in their own minds, and when communicating their pros and cons to a client.

The awkwardness is understandable. For retirees, insurance (annuities, life insurance, Medigap or Medicare Advantage policies, long-term care insurance, reverse mortgages) can be looked at as expensive investments, as sunk costs, as income-generating assets, or as tax-deferral or tax-reduction vehicles. The role of deferred annuities with “income riders” can be especially difficult to frame or position in the portfolio, because they contain several of those elements.

There’s a fundamental difference between investments and insurance. When people invest, they buy risk in the form of securities. They also buy asset management services. When they insure, they do the opposite. They sell (or transfer) risk to an insurance company by signing contracts. That is, they buy risk protection or risk management services. When annuities serve as both investments and insurance, their value can be hard to value or communicate.

One important benefit of insurance products often goes unarticulated, I think. Insurance creates opportunities. To transfer one risk, like market risk or longevity risk, to an insurance company is to create “risk budget” for a different kind of investment or expenditure.

Insurance lets people do things that would otherwise be too financially risky. Like spending money today instead of hoarding it for an uncertain or even unlikely calamity in the future. Identifying or measuring those things won’t be easy. Every client’s opportunity will be unique. Only the client can name it. But helping retirees name their own opportunities might produce the most satisfying moments you have with them.

Topics for the future

There are other challenges to retirement income planning. You’re probably familiar with them. There are, of course, the obvious uncertainties related to health and length of life. Then there is the sheer multiplicity of methods for generating income from existing assets. Not least, income planning often involves difficult trade-offs or sacrifices. Spouses may not agree on how to resolve them. Hesitation over an unpalatable trade-off can stall the execution of a plan forever.

Your business model may also present a significant challenge, if not an obstacle. If you earn fees only by charging a percentage of assets-under-management, how can you obtain compensation for providing advice on insurance or home equity? Advisers who are multi-licensed might not have difficulty handling this challenge, but others will.

There’s also the challenge of broaching personal topics with clients. Mortality is an unavoidable presence at the table. Any discussion of annuities, especially for couples, will involve mortality. Many clients will avoid talking about death. Retirement income planning encompasses almost everything that happens within a household. Not all clients or advisers will be equally eager or capable of “going there.” But we believe that the satisfactions make the effort worthwhile.

Tontine Savings Accounts

Posted on June 30, 2020 by Jonathan B. Forman and Richard K. Fullmer -

A tontine is a financial vehicle that allows people to pool their assets and their mortality risk and thereby enhance their savings. We envision tontine savings accounts (TSAs) as taxable or tax-deferred retirement accounts, with investors free to select their investments and payout method. Payouts could be 10% to 15% higher than those of commercial life annuities.

Unlike a regular savings account (but like a life annuity), an investor in a TSA can’t directly access her contributions or earnings. Instead, the investor would receive payouts only according to the payout method she elected.

A typical investor in a TSA might elect to receive relatively level monthly payments starting at her planned retirement age (if she is alive then) until her death. Alternatively, she might elect inflation-adjusted payouts that would start out lower than level payments but end up much higher. TSA payouts would be higher than payouts from regular savings accounts—precisely because surviving pool participants inherit the assets of those who die. These enhancements are known as “mortality gains” or “mortality credits.”

Payouts from a TSA are based on:

The investment returns on the investment portfolio that the investor elects
The mortality experience of her tontine pool
The payout method elected

While mimicking the high payouts of an actuarially fair variable life annuity, TSAs would cost significantly less than commercial life annuities. Tontine sponsors don’t insure investors against market risk or longevity risk, so they don’t need to set aside reserves to back up any guarantees. For a relatively trivial fee, they would merely invest and custody passively-managed funds, keep track of when investors die, reallocate forfeited assets to surviving investor accounts, and deliver payouts.

Sally, a 35-year-old investor

Consider Sally, a hypothetical 35-year-old investor who contributes $1,000 to a TSA at ABC Co., which could be an insurance or investment company. Sally and ABC agree that: 1) her contribution will be invested in a Standard & Poor’s 500 (S&P 500) stock index fund, 2) Sally will get an appropriate lump-sum payout at, say, age 70 if she is alive then, but 3) if she dies before age 70, her contribution will be forfeited (for the benefit of the other investors in ABC’s TSA portfolio).

Richard Fullmer

ABC does not guarantee the amount Sally would receive at age 70. When Sally first invests, neither she nor ABC knows how large her lump-sum payout will be in 35 years. But ABC offers Sally a “fair deal” [see explanation below] based on its transparent estimates of her probability of surviving to age 70 and the probable size of the lump-sum payout she would get.

For instance, ABC might tell Sally that a 35-year-old investor like her has an 80% chance of surviving to age 70 (from an appropriate life expectancy table) and that her investment in the S&P 500 index fund will earn an average annual rate of return of around 7% (from a capital markets forecast).

Given these two assumptions, ABC can tell Sally that if she survives until age 70, she should expect to collect a lump-sum payout of about $13,350 then. Here’s the math:

First, if the S&P 500 index fund grows at exactly 7% every year for the next 35 years, then Sally’s $1,000 investment will grow (ignoring expenses) to around $10,700 in 35 years ($10,676.58 = $1,000 × 1.07³⁵). Second, if exactly 20% of the 35-year-old investors in the TSA pool die before reaching age 70, then (if she survives until then) her payout will be around $13,350 ($13,345.73 = $10,676.58/0.80). If she doesn’t survive, she will have already forfeited her investment.

In other words, if Sally invests $1,000 in an S&P 500 index fund, she (or her heirs or estate) should get around $10,700 in 35 years. But if she instead invests $1,000 in a TSA, she should get around $13,350 if she survives until then. She would have an extra $2,670 to live on in retirement ($2,669.15 = $13,345.73 – $10,676.58). Depending on her bequest motives and other preferences, she could split her investment between a TSA and a regular account, for which she would designate beneficiaries.

‘Fair’ tontines

In a fair tontine, each investor receives a “fair” bet in the probabilistic sense, meaning that the expected value of mortality gains (while living) will equal the expected value of the account forfeiture (at death). Satisfying this “fairness constraint” requires that the forfeited assets of dying investors be transferred to the surviving investors in an actuarially fair (unbiased) way, based on each investor’s relative stake in the tontine pool and probability of dying.

Jonathan Forman

All in all, a fair tontine can be designed to offer fair bets to all investors even if they are of different ages and genders, invest different amounts at different times, use different investment portfolios, and elect different types of payouts.

Like traditional savings accounts and brokerage offerings, TSAs would be perpetually open-ended. New investors could open new accounts at any time, and current investors could make additional investments at any time. The individuals who make up any given financial institution’s tontine pool would change over time, and, eventually, newer generations of investors would completely replace older generations.

All fees for TSAs would be plainly and transparently disclosed. The use of index funds as investments would make the all-in costs to investors very low. For example, a TSA might invest entirely in index funds. Many discount brokerages charge 0.15% or less per year to administer such funds. If TSA management and record-keeping functions could be performed for about 0.25% of investments per year, a TSA’s annual expense ratio could be as low as 0.40%.

TSAs in practice

Besides IRAs or standard taxable accounts, accounts in 401(k) and other defined contribution plans could also serve as vehicles for TSAs. An employer could invest its matching contributions into TSAs for its employees and allow them to direct some, or all, of their own contributions into their TSAs.

During the accumulation stage, investors could also elect from a wide variety of investment options including stock, bond, and target-date strategies. Investors could be allowed to reallocate their assets (i.e., trade within their accounts) periodically.

When an investor contributes to her TSA, she would choose among payout options. These would include not only the lump-sum payout option chosen by Sally in the example above but also a variety of periodic and lifetime payout options. Lifetime payout options could be designed to mimic:

Immediate, level-payment annuities
Immediate, inflation-adjusted annuities
Deferred annuities (i.e., longevity insurance)
Joint-and-survivor annuities

Life insurance companies are well positioned to offer TSAs since they already deal with mortality data and trends. State insurance commissioners already know how to regulate pooled annuities, if not tontines. However, mutual fund or investment brokerage companies might also wish to offer TSAs since TSAs do not offer guarantees and thus are technically not contracts of insurance in the traditional sense of risk transfer.

No doubt, there will be some regulatory hurdles for TSAs, but we are confident that those hurdles can be overcome—as with any new financial product. All in all, we believe that TSAs can provide investors with a new and more valuable source of lifetime income, and we look forward to their inception.

Jonathan Barry Forman, J.D., M.A. (Economics), M.A. (Psychology), is the Kenneth E. McAfee Centennial Chair in Law at the University of Oklahoma College of Law. He can be contacted at [email protected].

Richard K. Fullmer, CFA, M.Sc. (Finance, Management), is the founder of Nuova Longevità Research. He can be contacted at [email protected].

2020 U.S. Retirement Plan Participant Satisfaction Survey

Posted on June 25, 2020 by No Author -

AM Best expects lower annuity sales in 2020

Posted on June 25, 2020 by Editorial Staff -

The U.S. life/annuity (L/A) insurance industry saw its pre-tax operating income rise by 34% in 2019, to $63.4 billion, driven by a decline in transaction-driven volatility relative to previous years and favorable equity markets for the year, according to a new AM Best report.

In its Best’s Special Report, “US Life/Annuity 2019 Statutory Results: Favorable Operating Results and Underwriting Performance,” AM Best said that the L/A industry’s underwriting performance was favorable, although margins narrowed owing to the ongoing decline in net investment returns.

For 2020, AM Best expects that annuity sales will not continue to grow at the same pace as the previous year given the current economic uncertainty, as the low interest rate environment, along with the impact of COVID-19, will exacerbate spread compression.

Low rates likely to continue to drag on margins until longer-term interest rates and credit spreads return to more historical levels. The ongoing drag from the low interest rate environment continues to hurt margins and stifle earnings growth, as is evident in the continued weakening in the industry’s investment returns, an AM Best release said.

The 2019 pre-tax operating gain rose was still below 2016-2017 amounts. The increase was driven mainly by earnings volatility in 2018, because of a fair amount of one-off transactions and company-specific events, which negatively impacted the industry’s statutory results. Partially offsetting the lower returns was the ongoing growth in absolute invested assets, which reached a record $4.49 trillion at year-end 2019.

Many transactions, which included affiliated reinsurance and captive transactions, were large in dollar amounts, but often had a neutral impact on enterprise-wide operating results.

Companies have been looking to offset the drag somewhat through expense efficiencies. The general expense to net premiums written ratio declined to 10.1% from 11.1% at year-end 2018, which shows that companies have found ways to be more efficient despite increasing their technology spending.

Statutory net income rose by 19% to $47.2 billion in 2019. There was a slight increase in realized losses, totaling $6.7 billion, as equity hedges and the decline in long-term interest rates impacted this line item.

While companies continued to build up capital, those capital levels will be tested in 2020, AM Best said. Modestly low single-digit premium growth was driven solely by a rise in annuity sales. AM Best expects growth to be challenged in 2020 due to the COVID-19 pandemic.

Companies are learning to make effective use of digital capabilities for sales, but innovation initiatives to bolster growth may be tested sooner than anticipated.

“However, even with falling equity markets, fixed annuities are still an attractive choice for consumers, and the need for guaranteed income could rise. Improving public perception about annuities, as well as simplification, should lead to increased sales,” the Special Report said.

Honorable Mention

Posted on June 25, 2020 by Editorial Staff -

After the big deal, AM Best affirms ratings of Jackson National and Athene

Jackson National Life Insurance Company’s financial strength and long-term issuer credit ratings remained “A” (Excellent) and “a+,” respectively, in the wake of its recently announced investment and reinsurance transactions with Athene Holding Ltd., according to the ratings agency AM Best.

AM Best has commented that the Credit Ratings (ratings) and outlooks of the members of Athene Group (Athene) remain unchanged following the recent announcement of its fixed annuity reinsurance agreement.

The agreement adds $27 billion of fixed deferred and fixed indexed annuity statutory reserves from Jackson National Life Insurance Company and includes a $1.25 billion ceding commission, with a net $29 billion in assets transferred to Athene.

AM Best also affirmed the ratings of Jackson’s wholly owned subsidiary, Jackson National Life Insurance Company of New York, and its direct parent, Brooke Life Insurance Company. Jackson National Life is headquartered in Lansing, MI.

On June 18, 2020, JNL’s parent company, Britain’s Prudential plc (Prudential), announced an agreement to reinsure JNL’s $27.6 billion IFRS book of fixed and fixed indexed annuity business to Athene Life Re Ltd, a subsidiary of Athene Holding Ltd.

Concurrently, Prudential (no relation to Prudential Financial in the U.S.) also announced that it has reached an agreement with Athene Holding Ltd for its subsidiary, Athene Life Re Ltd, to invest $500 million in Prudential’s U.S. holding company in exchange for an 11.1% economic interest (9.9% voting interest) in Prudential’s U.S. business.

Athene’s investment will be deployed in JNL, and the net impact of the capital investment and the reinsurance transaction is expected to be accretive to absolute and risk-adjusted capitalization. AM Best will monitor the execution of the announced transactions and Prudential’s future strategic plans for JNL in order to determine their impact on JNL’s ratings.

AM Best views this deal as potentially accretive to Athene’s business profile by expanding and increasing the diversification of earnings sources, dependent on the execution and integration of the block.

As part of the transaction, and expecting to close in July 2020, Athene will invest $500 million in Prudential plc’s U.S. holding company in exchange for an 11.1% economic interest (9.9% voting interest) in Prudential plc’s U.S. business.

The outlooks of Athene Holding Ltd.’s Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb”, its existing Long-Term IRs and the Long-Term ICRs of its operating insurance subsidiaries were affirmed with a positive outlook on May 22, 2020 and remain unchanged.

Not many people talk to advisers about decumulation: Allianz Life

Even before the recent equity market turmoil, more than half (55%) of non-retirees said they were worried they won’t have enough saved for retirement and 31% said they were way too far behind on retirement goals to be able to catch up in time.

Yet only 12% said “setting long-term financial goals” was their top priority and merely 6% identified developing a formal plan with an adviser as their top priority, according to a survey conducted in January 2020 by Allianz Life.

The upshot is that “many financial professionals may be missing opportunities to shift conversations about retirement from accumulation to protection,” an Allianz Life release said.

The 2020 Retirement Risk Readiness Study from Allianz Life Insurance Company of North America (Allianz Life) surveyed three categories of Americans:

Pre-retirees (those 10 years or more from retirement);
Near-retirees (those within 10 years of retirement); and
Retirees

While retirees were fairly confident about how long their money will last, six in 10 non-retirees said running out of money before they die is one of their biggest concerns. But only 27% of non-retirees who have advisers said they have discussed longevity risk and fewer than 15% had shared their financial insecurities about retirement with their advisers.

Before the recent market turmoil, 49% of all respondents identified a stock market drop as the greatest threat to their retirement income. But fewer than 30% of Americans with advisers said they had discussed market risk, including only 22% of those within 10 years of retirement.

Inflation-related anxiety

Nearly half (48%) of those surveyed viewed inflation as a threat in retirement. More than half (59%) were worried that the rising prices will prevent them from enjoying their retirement. Sixty-seven percent of those 10 years or more from retirement (versus 59% for near-retirees and 40% for retirees) expressed that concern. Only around two in 10 are talking about inflation with their advisers.

Allianz Life conducted an online survey, the 2020 Retirement Risk Readiness Study, in January 2020 with a nationally representative sample of 1,000 individuals age 25+ in the contiguous USA with an annual household income of $50k+ (single) / $75k+ (married/partnered) OR investable assets of $150k.

TIAA and Savi partner for student debt resolution

TIAA, a leading financial services provider, today announced that it is working with social impact technology startup Savi to make it easier for nonprofit institutions to offer a meaningful student debt relief solution to their employees.

The companies together launched a student debt solution designed to help employees of nonprofit organizations reduce their monthly student loan payments immediately, and to qualify over time for relief from the balance of their federal student loans by enrolling in the federal Public Service Loan Forgiveness (PSLF) program.

TIAA and Savi conducted a pilot of the solution from July 2019 through March 2020 with seven nonprofit institutions, four in higher education and three in healthcare. Within that period, employees who signed up for the solution were on track to save an average of $1,700 a year in student debt payments. Some employees’ payments were cut in half.

In addition, employees had an average projected forgiveness of more than $50,000 upon successful completion of 120 months in the PSLF program. The total projected forgiveness from the pilot exceeds $53,000,000 to date.

Fidelity nears settlement with its own plan participants

The nation’s largest retirement plan recordkeeper, Fidelity Investments, is close to settling a suit in which participants in its own 401(k) plan said they were charged excessive recordkeeping fees, NAPANet reported this week.

In October 2018, plan participants, as plaintiffs, accused their employer of violating its fiduciary duties by using the plan “as an opportunity to promote Fidelity’s mutual fund business at the expense of the Plan and its participants.”

The Fidelity Retirement Savings Plan had nearly $15 billion in assets and covered 58,000 participants at the end of 2016, according to the suit.

Judge William G. Young of the U.S. District Court for the District of Massachusetts ruled in late March that

“Fidelity has breached its duty of prudence with regard to its failure to monitor the recordkeeping expenses, and the class members may recover under the equitable doctrine of surcharge,” explaining that, “as with the failure to monitor the proprietary mutual funds, the Plaintiffs at trial will bear the burden of proving the exact extent of loss (an exercise that may or may not be trivial given the parties’ stipulations), while Fidelity will bear the burden of showing this lack of monitoring has not caused this loss.”

Fidelity “…does not dispute that the Plan Fiduciaries declined to monitor recordkeeping expenses but argues that it has not violated its fiduciary duties because all expenses were returned to the Plan through the mandatory Revenue Credit, and thus netted to zero,” wrote Judge Young. The “argument rests on the proposition that there is no breach of a duty to be cost-conscious where there are no costs.”

MetLife inks first U.K. longevity reinsurance deal

Metropolitan Tower Life Insurance Co., a subsidiary of MetLife, Inc., has announced its first United Kingdom longevity reinsurance transaction with Pension Insurance Corporation plc. Metropolitan Tower will provide reinsurance to PIC for longevity risk associated with about £280 million of pension liabilities.

“With this transaction, MetLife is establishing itself as a reinsurance solution for direct insurers in the U.K,” said Graham Cox, executive vice president and head of Retirement & Income Solutions at MetLife, in a release.

“While this is MetLife’s initial step into the U.K. longevity reinsurance market, our long history and mortality expertise position us well for the future,” he said. “In 2019, there were more than £40 billion of U.K. pension risk transfer transactions completed.”

DOL Has Discouraging Words for ESG Funds

Posted on June 25, 2020 by Kerry Pechter -

Under a new Department of Labor proposed rule, ERISA plan fiduciaries would not be able to include ESG funds in plans when the investment strategy of the vehicle is to “subordinate return or increase risk for the purpose of non-financial objectives.”

“Private employer-sponsored retirement plans are not vehicles for furthering social goals or policy objectives that are not in the financial interest of the plan,” said Secretary of Labor Eugene Scalia, in a press release Tuesday evening. “[Plans] should be managed with unwavering focus on a single, very important social goal: providing for the retirement security of American workers.”

The proposal would make five core additions to the regulation:

New regulatory text to codify the Department’s longstanding position that ERISA requires plan fiduciaries to select investments and investment courses of action based on financial considerations relevant to the risk-adjusted economic value of a particular investment or investment course of action.
An express regulatory provision stating that compliance with the exclusive-purpose (i.e., loyalty) duty in ERISA section 404(a)(1)(A) prohibits fiduciaries from subordinating the interests of plan participants and beneficiaries in retirement income and financial benefits under the plan to non-pecuniary goals.
A new provision that requires fiduciaries to consider other available investments to meet their prudence and loyalty duties under ERISA.
The proposal acknowledges that ESG factors can be pecuniary factors, but only if they present economic risks or opportunities that qualified investment professionals would treat as material economic considerations under generally accepted investment theories. The proposal adds new regulatory text on required investment analysis and documentation requirements in the rare circumstances when fiduciaries are choosing among truly economically “indistinguishable” investments.
A new provision on selecting designated investment alternatives for 401(k)-type plans. The proposal reiterates the Department’s view that the prudence and loyalty standards set forth in ERISA apply to a fiduciary’s selection of an investment alternative to be offered to plan participants and beneficiaries in an individual account plan (commonly referred to as a 401(k)-type plan). The proposal describes the requirements for selecting investment alternatives for such plans that purport to pursue one or more environmental, social, and corporate governance-oriented objectives in their investment mandates or that include such parameters in the fund name.

This proposed rule says little that is new. “ERISA fiduciaries may not sacrifice investment returns or assume greater investment risks as a means of promoting collateral social policy goals,” a DOL Field Assistance Bulletin said in 2018, and in previous bulletins.

But this proposal lacks the nuance or flexibility that the DOL has expressed in the past. Phyllis Borzi, the director of the Employee Benefit Security Administration under President Obama, described previous policy to RIJ in an email this week.

“Throughout the history of ERISA, on a bipartisan basis, the DOL has consistently refused to ban either ESG/ETI investing or proxy voting,” Borzi told RIJ this week. “Instead, the Department has consistently said that while financial considerations must be paramount and fiduciaries cannot sacrifice return to advance other objectives, that when faced with multiple investment possibilities with equal financial characteristics and impacts, a fiduciary can take ESG/ETI factors into consideration (the so-called “all things being equal” rule).

“But since the end of the George W. Bush Administration, the U.S. Chamber of Commerce has aggressively and successfully lobbied the Department to issue guidance that in effect creates a strong deterrent effort for a fiduciary to consider these factors,” she said.

“In the Obama Administration, the Department issued guidance to reiterate the balanced interpretation of ERISA that existed since the late 70’s and reverse the strong inference that the legal barriers were nearly insurmountable to engage in ESG investing. One of the earliest things the Trump Administration did was to try to go back to the unfavorable interpretation issued in the waning days of the Bush Administration. This is simply a continuation of that effort.”

Is there a danger that activist fiduciaries might try to divert plan assets toward their own social or political goals? This concern may have been pertinent in the defined benefit pension era, when fiduciaries controlled vast pools of money, but it seems less so in the 401(k) era, when participants can choose their own investments.

A study of thousands of companies, published in the Journal of Sustainable Finance and Investment, found no evidence of poor performance by ESG companies. “The results show that the business case for ESG investing is empirically very well founded. Roughly 90% of studies find a nonnegative ESG–CFP (corporate financial performance) relation,” the study said.

A 2016 survey by Natixis Global Asset Management of 951 U.S. employees participating in defined contribution plans demonstrated interest from individuals in ESG investments: 64% said they were concerned about the environmental, social and ethical records of the companies they invest in and 74% said they would like to see more socially responsible investments in their retirement plan offerings.”

Better than Throwing Darts

Posted on June 25, 2020 by Kerry Pechter -

When Kent Jacquay, a 47-year-old former insurance producer with a knack for computer programming, speaks to groups of insurance agents about selling fixed indexed annuities (FIAs) his favorite prop is a dartboard—a metaphor for how they tend to pick contracts for clients.

To improve their methodology, Jacquay set up a software company in Fort Wayne, Indiana in 2018 called Index Resource Center LLC. His anchor product is Indexalyzer, a Excel-based tool for sorting, filtering and comparing fixed indexed annuity (FIA) contracts.

Jacquay has been acquainted with FIAs since 1996, when the products were new and only insurance agents sold them. He believes FIAs can uniquely enhance the financial lives of American retirees by giving them a chance for higher returns than fixed-rate products but with equal protection from loss.

“The FIA was designed to beat MYGAs (multi-year guaranteed rate annuities), bonds, and certificates of deposit—anything that’s guaranteed not to lose money,” he told RIJ. “And it does its job really well.”

But FIA insurance marketing organizations (IMOs) and agents who sell FIAs don’t do an equally good job of explaining—or even understanding—the growth mechanisms that drive the products, he says. And when it comes to navigating the bewildering array of “crediting” strategies and indices that determine a contract’s likely returns, they don’t know much more than their clients.

“We have all these agents selling billions of dollars of these products. But they have few clues about how the crediting rates have performed,” Jacquay said. “If I look at the crediting choices and try to choose where to put my money, how do I know what to do? Do I choose a two percent monthly cap on the S&P 500 Index, or a 120% participation rate on the Barclays Focus 50? Nobody knows.”

Lots of tools are advertised on the Internet that claim to help insurance agents and financial advisers select the “best” FIA. “There are a million different software vendors trying to sell their wares to marketing organizations,” said Sheryl Moore, CEO of Wink, Inc., the annuity data and analysis firm, noting that there’s little or no regulation of them.

But that is changing. Many broker-dealers (who are more closely regulated than insurance agents) now sell FIAs. At the same time, the Securities & Exchange Commission’s “Reg BI” (Regulation Best Interest) is about to require brokers to be more ethical. Demand should grow for tools like Indexalyzer that can document an adviser’s due diligence regarding product recommendations. The tools themselves are likely to come under greater scrutiny as well.

How Indexalyzer works

Via GoToMeeting, Jacquay guided me on a virtual tour of Indexalyzer this week. He demonstrated its sorting and comparison functions. The number of variables is immense, and the number of potential combinations of those variables must run into the millions.

Options to consider include the insurance carrier, the strength rating of the carrier, and the various products each carrier offers. Within each product, there are multiple term lengths, multiple indices, and a host of triggers, caps, spreads, fees and participation rates that affect returns (and reflect the structure of the underlying call options). Some products offer lifetime income options and/or bonuses.

(A “cap” means that the client is credited with interest equal to the index gain up to a cap. A “participation rate” indicates the percentage of the index gain that the client’s account will receive.)

Jacquay proudly pointed out Indexalyzer’s ability to back-test the performance of a specific crediting strategy. He showed me the annual returns of a specific strategy using a specific index. He knows that past returns don’t predict future returns, but he thinks they allow for rankings that reveal the strongest contracts. (Mutual funds use past returns in their marketing, of course.)

“We take the past ten years’ movement of the indices, to the month, to see how the products performed. We apply every bonus and every fee that would affect the average 10-year compound rate of return. Updating the indices every month is crucial. Most of the others do it once a year. We update rates from carriers every day. Indexalyzer shows how each crediting method and index performed over the past 10 years.

“We don’t try to predict the future,” he added. “We’re just looking at the most recent ten years. We don’t say, ‘You can expect a certain percent return out of this product.’ We’re showing exactly what happened in a real market cycle, for all the different crediting options. We help the client and agent make a more informed decision about seven or eight or ten options, to see which performed well and which didn’t.”

(His back-tests showed that some contracts averaged returns of 8% or more over the past ten years, but that shouldn’t be surprising. The S&P 500 Index rose three-fold over a recent 10-year period, to 3,335 on Feb. 5, 2020 from 1,066 on February 5, 2010.)

For investors, a perplexing and even deal-breaking aspect of FIAs is that carriers can, after the first crediting term, change their caps or participation rates in response to changing investment conditions, such as interest rates or volatility levels. The minimums are published in the contracts, Jacquay said, but they do not commonly appear among the specs on product rate sheets.

(These are not the minimum non-forfeiture interest rates paid by issuers of fixed annuities and required by state insurance laws. They are the lowest rates that the issuer can use without re-filing the contract for approval by regulators.)

“You have this one variable that can’t be predicted, and that’s the carriers’ ability to change the rates after the first year,” he told RIJ. “You might see statements from the carriers about their past renewal records, but you don’t know what will happen in the future. The insurance companies always have a card they can play: they can take the performance down to the minimum.”

Jacquay can’t predict such reductions, but can model hypothetical reductions in the rates, to stress-test a crediting rate. Such reductions don’t necessarily destroy the contract value, he said. “The agents and IMOs get furious when a carrier lowers its rates. But I say, Let’s look at what that really does to the final return. We can adjust the rates in Indexalyzer to the minimum to see how it performs. The product may still be doing its job in outperforming guaranteed fixed rate products. I’d like to own a product that does its job [of outperforming fixed-rate products] even at the minimum.”

Takeways

Of course, no one can predict the returns of an FIA, just as no one can predict the returns of a risky security. But an FIA’s caps and participation rates are so suggestive of future returns that it’s difficult not to be enticed by them. For instance, some contracts offer participation rates of more than 100%, while other have no caps on returns.

But there must be rules of thumb that agents can use when for comparing FIAs, right? Here are some takeaways from my conservation with Jacquay:

Consider term length first. Does the client have the desire or ability to park the money in an investment for one year? Three years? Ten years?
Will the client use the product to generate retirement income? Contracts that are designed for income may not be optimal for accumulation and vice-versa.
The client’s risk tolerance is an important consideration. Would he or she buy from a company with a B++ credit rating if the payouts were potentially higher, or only from an A rated company? This decision may depend in part on the term length.
The month-to-month crediting strategy, which may appear to have tremendous potential, has consistently produced low returns in the recent market cycles.
The crediting strategy (caps, participation rates) is a more important consideration than the index. An uncapped strategy (100% participation) is more advantageous when equity markets are rising. In flat markets, a capped strategy may be more advantageous than a participation rate.
When choosing an index, most agents recommend and most clients adopt the S&P 500 Index. But Jacquay suggests that other indices, with higher risk profiles, may be more suitable for less risk-averse clients. Differences in indices, however, may be rendered moot by offsetting differences in crediting rates.

Bottom line: Don’t expect fixed indexed annuities to produce equity-like returns. Their advantage stems from their ability to outperform other products with no-loss guarantees, such as fixed rate annuities and certificates of deposits.

Your Safest Retirement Asset

Posted on June 25, 2020 by Kerry Pechter -

For as long as I’ve paid into Social Security, I’ve regarded it as an asset, not a liability. So I’m always perplexed by the way Social Security is denigrated.

People call it a Ponzi scheme, as if the U.S. Treasury’s ability and responsibility—as the creator of our sovereign currency, and because benefits are earned—to send out Social Security checks would ever be in doubt.

Social Security is also often slandered as a zero-sum game between generations—as if the program were strictly a liability for workers and not an asset until mailed to retirees. This is an intentional distortion. I believe I receive an asset in return for my payroll taxes. It’s not marketable; that’s part of what makes it so valuable.

Already, I hear legislators refer to an approaching Social Security “train wreck.” There is no approaching train wreck. When people want to fool you, they show you half of a balance sheet. They show you the liabilities and distract you from the assets.

So you will hear higher Social Security taxes described as “unaffordable,” even though the program adds $1 trillion of consumer demand into the U.S. economy each year and keeps tens of millions of older people out of poverty—and less dependent on their children.

You will hear about scary trillion dollar “shortfalls,” even though the shortfall is a tiny percentage of payroll over the next 75 years. If payroll taxes do go up a bit, everyone’s (except for the wealthiest, and they don’t need it) Social Security asset will not have to shrink by 25%.

Many people say that they’d rather invest their payroll taxes in stocks. This idea does not acknowledge that the certainty of future Social Security benefits gives them more risk budget or risk tolerance to spend on stocks. They also say that the low worker-to-retiree ratio in the U.S. (a result of declining birth rates) means that there will be shortages of goods and inflation. As long as the Chinese keep accepting dollars for goods, shortages seem unlikely.

You hear that today’s bailouts mean that we won’t be able to afford a better-funded Social Security program. Quite the opposite. The bailouts prove that there are no strict limits to what we can or can’t afford. Do we still have to pay taxes? Of course. But we will pay the taxes (progressively) with money that the government has already spent into the economy.

Social Security has for decades been the “third-rail” of American politics. I hope it stays that way.

Aon launches ‘PEP,’ with Voya as recordkeeper

Posted on June 25, 2020 by Kerry Pechter -

Aon plc, the global employee benefits firm, has launched a Pooled Employer Plan (PEP), with itself as the “pooled plan provider” and fiduciary. After a competitive bidding process, Aon chose Voya Financial as the recordkeeper for the new plan, which will be available Jan. 1, according to an Aon release today.

If they catch on, PEPs could transform the federally-regulated 401(k) defined contribution savings industry in the U.S. By allowing service providers to consolidate dozens or hundreds of small individual plans into large omnibus plans, they would gain vast new economies of scale.

Lots of questions still remain about PEPs:

Will the benefits of those economies of scale will be passed on to plan participants?
Will PEPs significantly expand access to workplace retirement savings plans in the U.S.?
Are there conflicts of interest inherent in provider-sponsorship of 401(k) plans?
Will PEP sponsors try to consolidate existing plans or create new plans?
What fiduciary responsibility will employers retain?
Will PEPs create new monopoly power among service providers in the retirement business?
Will PEPs wipe out large numbers of “mom-and-pop” 401(k) service providers?
Could PEPs increase or decrease the likelihood of offering annuities in 401(k) plans?

The U.S. Department of Labor is currently gathering comments on some of those issues. (See today’s story in RIJ on the official Request for Information.)

The new PEP stems from the Setting Every Community Up for Retirement Enhancement (SECURE) Act provision allowing employers to join forces to create 401(k) plans. Voya serves approximately 13.8 million individual and institutional customers in the U.S. Click here for more information from Aon.

According to today’s press release:

“Aon’s PEP will relieve employers of many fiduciary duties they have today. Due to the economies of scale, it also has the potential to lower fees for plan participants and provide access to state-of-the-art features that may be difficult for individual employers and fiduciary committees to both assess and access independently.

“The defined contribution plan provides the efficiency and scale of a pooled plan, while maintaining individual employer autonomy to define matching and other contribution levels, and various key plan design features. It also has the potential to provide cost savings to employers of all sizes.

“The SECURE Act, which was federal legislation passed into law December 2019, was designed to encourage broader 401(k) plan participation and greater retirement savings.

“With the law’s passing, employers will no longer need to sponsor their own individual 401(k) plan and absorb the risks and workload associated with that role. Instead, employers from all industries and sizes may pool resources together to increase efficiency and create better outcomes for participants.”

DOL requests input on ‘pooled’ 401(k)s

Posted on June 25, 2020 by Editorial Staff -

Changes to U.S. labor laws by the SECURE Act of 2018 created the opportunity for a variety of 401(k) service providers—asset managers, recordkeepers, fiduciaries—to sponsor “pooled” 401(k) plans for a number of unrelated companies.

In the past, only employers could sponsor individual plans, and only related companies or businesses could create or join pooled employer plans, or PEPs. So the legal change represents a potential sea change in the way the U.S. does defined contribution.

On the one hand, the shift to provider-sponsorship could free employers from cumbersome and expensive pension-like responsibilities. On the other hand, sponsorship of plans by profit-seeking service providers creates obvious potential for self-dealing.

To explore that potential, and confront it, the DOL’s Employee Benefits Security Administration is “seeking information regarding the possible parties, business models, conflicts of interest, and prohibited transactions that might exist in connection with PEPs” to assess “the need for new prohibited transaction exemptions or amendments to existing exemptions.”

Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to [email protected]. You can also submit comments by clicking here.

As stated in the June 18 issue of the Federal Register, the DOL would like feedback by July 20, 2020, on the following questions:

What types of entities are likely to act as pooled plan providers? For example, there are a variety of service providers to single employer plans that may have the ability and expertise to act as a pooled plan provider, such as banks, insurance companies, broker-dealers, and similar financial services firms (including pension recordkeepers and third-party administrators).

Are these types of entities likely to act as a pooled plan provider? Are some of these entities more likely to take on the role of the pooled plan provider than others? Why or why not? How many entities are likely to act as pooled plan providers? Will a single entity establish multiple PEPs with different features?

What business models will pooled plan providers adopt in making a PEP available to employers? For example, will pooled plan providers rely on affiliates as service providers, and will they offer proprietary investment products?
What conflicts of interest, if any, would a pooled plan provider (along with its affiliates and related parties) likely have with respect to the PEP and its participants? Are there conflicts that some entities might have that others will not?
To what extent will a pooled plan provider be able to unilaterally affect its own compensation or the compensation of its affiliates or related parties through its actions establishing a PEP or acting as a fiduciary or service provider to the

PEP? What categories of fees and compensation, direct or indirect, will pooled plan providers and their affiliates and related parties be likely to receive as a result of operating a PEP, including through the offering of proprietary investment products? Are there likely to be any differences in types of fees and compensation associated with operation of a PEP as compared to a single employer plan?

Do respondents anticipate that the Department’s existing prohibited transaction exemptions will be relied on by pooled plan providers, and if so, which exemptions are most relevant? Are any amendments needed to the Department’s existing exemptions to address unique issues with respect to PEPs? Do respondents believe that there is a need for additional prohibited transaction exemptions? If so, please describe the specific transactions and the prohibited transactions provisions that would be violated in connection with the transactions.
If additional prohibited transaction relief is necessary, should the Department consider developing distinct exemptions for different categories of pooled plan providers (e.g., to specifically address the unique prohibited transactions involved for certain entities) or should the Department address pooled plan provider conflicts more generally, in a single exemption? What are advantages and disadvantages of either approach?
To the extent respondents do not believe additional prohibited transaction relief is necessary, why? How would the conflicts of interest be appropriately addressed to avoid prohibited transactions? Are different mitigating provisions appropriate for different entities? Why or why not?
Do employer groups, associations, and PEOs described in the Department’s

MEP Final Rule face similar prohibited transactions to those of pooled plan providers, and do they have similar need for additional prohibited transaction relief? Are there prohibited transaction issues unique to employer groups or associations, or PEOs?

Plan Investments

What plan investment options do respondents anticipate will be offered in PEPs and MEPs? Are the investment options likely to be as varied as those offered by large single employer plans? Are the options likely to be more varied than those offered by small single employer plans?
What role will the entities serving as pooled plan providers or MEP sponsors, or their affiliates or related entities, serve with respect to the investment options offered in PEPs and MEPs?

Employers in the PEP or MEP

How many employers are likely to join a PEP or MEP? Will joining a PEP or MEP be more appealing to employers of a particular size? Are there any estimates of the total number of employers and participants likely to be covered by newly formed PEPs and MEPs? Are there any estimates of the number of employers and participants that will migrate from a single employer plan to a newly formed PEP or MEP?
Will larger employers also seek to join PEPs or MEPs in order to take advantage of additional economies of scale? Will any additional prohibited transactions exist as a result of substantial size differences between employers in the PEP or MEP (e.g., because a large employer has greater ability to influence decisions of a pooled plan provider or MEP sponsor as compared to a small employer)?
Will the existence of multiple employers in a PEP or MEP cause greater exposure to prohibited transactions in connection with investments in employer securities or employer real property? In what form will PEPs and MEPs hold employer securities or employer real property?
Do respondents anticipate that prohibited transactions will occur in connection with a decision to move assets from a PEP or MEP to another plan or IRA, in the case of a noncompliant employer? Do respondents anticipate that any other prohibited transactions will occur in connection with the execution of that decision?

Where to view comments

All comments received must include the agency name and Regulation Identifier Number (Z–RIN) for this request for information (1210–ZA28). In light of the COVID–19 pandemic, the DOL asks that all comments be submitted electronically and not followed with paper copies.

Comments will be available to the public, without charge, online at http://www.regulations.gov and http://www.dol.gov/agencies/ebsa, and at the

Public Disclosure Room, Employee

Benefits Security Administration, Suite

N–1513, 200 Constitution Avenue NW,

Washington, DC 20210.

‘We Are Going To Buy Your Bonds Whether You Want Us To Or Not’

Posted on June 18, 2020 by Tim Duy -

This week the Federal Reserve announced it is expanding its corporate bond-buying program. Via Victoria Guida at Politico:

The Fed is going to create an index of U.S. corporate bonds that it will purchase on the open market as long as they meet eligibility standards — an approach that will spare the companies from having to seek aid directly from the central bank.

The goal of the $750 billion emergency lending program is to keep cash flowing in the markets and support “the availability of credit for large employers,” the Fed said on Monday. Stocks rose on the news, reversing sharp losses earlier in the day.

The announcement represents a shift in strategy for the central bank, which was previously only going to buy individual bonds issued by companies that approached it directly. Now the Fed will buy bonds of all eligible companies, whether they ask or not.

Brian Chappatta at Bloomberg wonders why the Fed is doing this at all:

The most surprising part of this is there is virtually no evidence that the corporate-bond market needs this kind of intervention — it has been working nearly flawlessly for months.

This does create a bit of a problem for my narrative (not that it’s all about me). I have typically described the Fed’s asset purchase program and lending program in terms of market functioning. The Fed identifies a gap in the credit market and tries to bridge that gap. In some cases, bridging the gap might be possible by simply being a credible backstop to a credit market. This appeared to be the case in the corporate debt market.

Just the willingness of the Fed to prevent a liquidity crisis from becoming a solvency crisis was enough to revive the corporate debt market. As Chappatta noted, the market appeared to be functioning just fine. So why the extension of the program? Isn’t the best case scenario the one in which the Fed can stabilize credit markets without actually buying anything?

This isn’t the first time the Fed has done something like this. Last week, the Fed put a floor under the asset purchase program by holding it “at least at the current pace to sustain smooth market functioning.” Heather Long at the Washington Post quickly eyed the logical conundrum:

Hi, good afternoon, Chair Powell. I’m struggling with two things that I’m hoping you can provide some clarity on. The first is the ongoing bond buying program. You say that it’s needed to continue the smooth functioning of markets, but I guess most of us aren’t really seeing instability in markets right now. So, if you could kind of give us some clarity of what you’re seeing that needs to continue to be smooth at that level and that pace.

Powell responds:

CHAIR POWELL. There have been gains in market function, although not fully back to where you would say they were, for example, in — in February, before the pandemic arrived. We don’t take those gains for granted though. This is a — this is a highly fluid situation and we’re we’re not taking those for granted. And in addition, as I pointed out in my — in my statement, those purchases are clearly also supporting highly accommodative — or accommodative financial conditions, and that’s — that’s a good thing, so that’s why we’re doing that.

It is not a particularly satisfying answer. It doesn’t fully embrace that asset purchases are increasingly less about market functioning and increasingly more about accommodative financial conditions. In other words, quantitative easing does not just allow for the transmission of accommodative interest rate policy, but is accommodative policy by itself. I discussed this Monday in my Bloomberg column.

The Fed did a stealth easing last week and it kind of flew under the radar.After this week’s bond market news, I am more convinced that the Fed is rapidly moving beyond market functioning but not being very direct about that move. It is fairly easy to conclude that the Fed is working to push down interest rates (or push up prices) across a range of financial assets but not directly saying this is the Fed’s objective. I understand why they want to pursue such a policy. I don’t understand why they don’t just say they are pursuing such a policy.

The Fed’s behavior this past week does give us a clue on how yield curve control is going to work. In theory, an advantage of yield curve control is that the Fed could control interest rates by just promising to purchase debt at a certain price. The promise alone should be effective with minimal actual purchases. Just as the Fed’s promise was enough to stabilize the corporate debt market.

A risk management focused policy that maybe didn’t quite know which was more important, the price or the quantity, might choose to do both. In that world, the Fed set interest rates at zero along the one, two, etc. year horizons while at the same time expanding the quantity of assets purchased. I think that’s how it would work. At least that what I am thinking tonight.

Bottom Line: The Fed appears to be taking actions that are not obviously necessary to meet its stated objective of smooth market functioning. It looks like the Fed is trying to enhance the portfolio balance effect of asset purchases. I am not opposed to that, but I am wondering why they don’t just say it.

One reason could be that they fear Congress will limit the amount of fiscal support should the Fed push monetary policy further now. I am at a loss for another reason. The implication is that, short-term psychological shift aside, even if the economy just limps ahead it looks like the Fed is providing support for a wide range of asset classes.

This post originally appeared on Tim Duy’s blog.

Offer Partial Social Security Benefits as a Work-Longer Incentive

Posted on June 18, 2020 by Eugene Steuerle -

Workers often face uncertainty about their jobs, but not since the Great Depression have so many been unemployed or worried about becoming unemployed. Some have been laid off temporarily but don’t know if their job will come back. Others find themselves without a job and searching in a labor market with few openings.

These problems hit older workers especially hard, as research shows they have the toughest time getting a new job and, once reemployed, have great difficulty restoring their former pay level. Their problems will be with us for some time as we recover from the COVID-19 pandemic and recession.

I have a simple suggestion to help older workers that would cost the government little money because it mainly changes how and when older workers receive their Social Security payments, with adjustments that keep their value actuarially fair. The goal is to give people much more flexibility to adapt to changing financial needs and employment prospects.

Social Security could make it easier for those eligible for old age benefits after age 62 to opt in and out of benefit receipt and collect partial benefits, with each delay in benefit receipt boosting future annuity payments through delayed retirement credits and related adjustments, similar to what is already sometimes allowed.

Older workers hoping to get back in the labor market can then adjust as their opportunities and needs change. This approach would grant older workers, whether retired or not, flexibility to use some of their Social Security benefits to buy a very good annuity at variable levels over time.

The ability for some eligible beneficiaries to opt in and out of the system and a mandated system of partial benefits for others already exists, though the process is confusing.
Consider those older than the full retirement age (or FRA, age 66 and 2 months for those born in 1955). Technically, they can receive benefits, suspend them, and resume collecting. But Social Security doesn’t broadcast this ability, so few know it exists.

For every year these workers delay collecting benefits until age 70, they receive an 8% increase in their annuity, plus inflation adjustments. Thus, if I were born in 1955 and delay benefit receipt 46 months after the full retirement age, from 66 and 2 months to age 70, I can get about a 31% higher annual benefit every year after age 70. But I could also take benefits at age 66 and 2 months, stop receiving them completely for two full years at ages 67 and 68, then start receiving them again at age 69, thereby increasing my future annual annuity by 16%.

Why not make this system simple and transparent? Why not allow workers simply to take a partial benefit that works the same way? And why not give them the option not just to opt in and out of the system periodically, but also to cut back on some benefits in exchange for later actuarial adjustments?

For instance, we could allow people to take half their benefit in a given year and receive half the delayed retirement credit, then receive no benefit the next year in exchange for a full delayed retirement credit, and switch again to a full benefit in a third year. This would allow people to adjust over time according to their needs and work prospects—a particularly valuable option during the ups and downs of recession and recovery.

The language surrounding credits and adjustments for delayed benefit receipt confuses even financial advisers. It derives from a long history in which delayed benefit receipt was defined by an earnings test that took back Social Security benefits as beneficiaries earned more. Congress removed the earnings test for those past the FRA, but as the FRA increases toward age 67 for those born in 1960 and later, more older workers are quickly becoming subject to it and fewer for the delayed retirement credit.

A variation on a historically much stricter earnings test remains for those retiring between age 62 and the FRA. In essence, in 2020, Social Security is reducing benefits by one-half of earnings above $18,240 for beneficiaries between age 62 and the FRA, although a different formula applies to the year when the FRA is reached. But benefits lost in those early years are offset by a little more than 7% per year increase in later payments.

The point to remember is that those between age 62 and the FRA essentially are often forced to take something similar to a delayed retirement credit. The amounts involved are fixed by an earnings-related formula, not their financial needs. One survey found three out of five respondents incorrectly viewed the earnings test as a permanent tax on work, so it also deters work, especially for those in their early 60s.

Getting $.07 or $.08 every year of remaining life on every $1.00 deposited, plus an inflation adjustment, is a great annuity rate for those with average or better life expectancies, better than anything available in the private market, especially now that the Federal Reserve has cut interest rates to nearly zero. The main losers in the mandated system are those younger than the FRA with chronic health problems that would lead to an early death; they would be better off not purchasing an annuity.

This simple reform would enable people to make adjustments according to their own financial needs in times of reduced income or unemployment and to buy the decent annuities the system offers over time and in variable amounts.

Although congressional action would be necessary to allow beneficiaries to take partial benefits before the FRA, the Social Security Administration needs no authority to clarify the existing opportunity to opt in and out for those older than the FRA. The sooner it can adapt, the sooner workers—including those forced to retire earlier than planned during economic downturns—can adapt according to their own needs and future opportunities.

As our population gets older, we are moving into a world where the worker-to-beneficiary ratio in Social Security falls from 4:1 in 1965 to 3:1 in 2010 to close to 2:1 in 2040. At the same time, older people recently have increased their rate of participation in the labor market, and their employment rate actually increased during the last recession.

Even if the COVID-19 crisis had not swelled the number of older workers and retirees in need of greater flexibility, Congress could make this convoluted system of actuarial adjustments salient and transparent for millions of current and future Social Security beneficiaries.

This column originally appeared on Urban Wire on May 29, 2020.

Nationwide launches suite of variable annuity income benefits

Posted on June 18, 2020 by Editorial Staff -

Nationwide Life Insurance Company has launched three new income riders—the Nationwide Lifetime Income Rider+ (L.inc+) Suite—that will be available for an additional cost with certain Nationwide Destination 2.0 variable annuities.

Options within the Nationwide L.inc+ Suite can provide either “a consistent income stream that will never decrease, a fluctuating income stream with more market exposure for greater growth potential, or a front-loaded stream to fill an income gap.”

All guarantees and protections are subject to the claims paying ability of Nationwide Life Insurance Company. The three riders are:

Nationwide Lifetime Income Rider+ Core (L.inc+ Core): Consistent retirement income for life. For clients seeking a level of certainty for predictable retirement income by converting part of their savings into a steady retirement paycheck. L.inc+ Core offers guaranteed income with maximum equity exposure of 60%.

Nationwide Lifetime Income Rider+ Accelerated (L.inc+ Accelerated): Retirement income for life with greater growth potential. For clients who are comfortable with fluctuating retirement income in exchange for greater growth potential. L.inc+ Accelerated offers guaranteed income for life with the ability to allocate up to 100% in equities.

Nationwide Lifetime Income Rider+ Max (L.inc+ Max): Front-loaded retirement income for life. For clients who expect to need more of their income in the early years of retirement, for example to bridge an income gap until another source of income, such as Social Security, becomes available. L.inc+ Max offers guaranteed income for life with 100% equity exposure for greater growth potential.

Nationwide has also introduced an “Income Carryforward” feature. It allows contract owners to roll forward one year of unused income during the income phase. According to the prospectus, the Carryforward privilege:

“permits a Contract Owner to withdraw any part of the Lifetime Withdrawal Amount not taken in a given calendar year (the Income Carryforward amount) in the next calendar year, and the next calendar year only.”

For example, “Assume a Contract Owner purchases a contract on April 1, 2020 for $100,000, with a Roll-up Interest Rate of 6.00%. On April 1, 2021, assume the Current Income Benefit Base is $106,000 ($100,000 x 0.06). In May of 2021, assume the Contract Owner elects to begin lifetime income, taking the first Lifetime Withdrawal on May 1, 2021. At the time of the first Lifetime Withdrawal, assume the applicable Lifetime Withdrawal Percentage is 4.00%. Assuming no change to the Current Income Benefit Base from April 1, 2020, the Lifetime Withdrawal Amount would be $4,240 ($106,000 x 0.04).”

The L.inc+ Suite also offers a one-time “Non-Lifetime Withdrawal” that won’t impact the roll-up rate to the income benefit base, a 5% roll up to the income benefit base during the accumulation phase, and provides monthly income for life—even if the contract value falls to zero. An annual step-up feature allows clients to lock in the income benefit base at the highest anniversary contract value. L.inc+ also offers inflation protection through a simple interest roll-up rate.

In addition, the L.inc+ Suite offers enhanced dollar cost averaging and asset rebalancing, offers the ability to take IRS required minimum distributions (RMDs) without impacting guaranteed lifetime income, and income is calculated on a calendar year basis, to simplify clients’ planning by knowing exactly when their annual income will re-set.

Ties grow between Athene and Jackson National

Posted on June 18, 2020 by Editorial Staff -

Athene Holding Ltd. has agreed to reinsure Jackson National Life’s $27.6 billion in-force fixed and fixed index annuity liabilities, effective from June 1, 2020. Athene will pay Jackson a ceding commission of $1.25 billion. Jackson will continue to provide account administration and services for the reinsured policies, a release said.

In addition, Athene will invest $500 million in Jackson and receive an 11.1% financial interest in Jackson and 9.9% of the shareholder voting rights.

Jackson National Life, a unit of Prudential plc of the U.K., is the top issuer of annuities in the U.S., with first-quarter 2020 sales of just under $5 billion. Of that, about $1 billion was fixed and fixed indexed annuities and the rest was variable annuities. Jackson’s Perspective II contract is the top-selling variable annuity.

Together, the Athene investment and reinsurance transactions are estimated to boost Jackson’s Risk-Based Capital (RBC) ratio by about 80 percentage points. “Today’s transactions with Athene… further strengthen our capital position and enhance our ability to grow,” said Michael Falcon, CEO of Jackson Holdings LLC.

Insurance companies buy risk (i.e., selling protection against risk), and need to reserve a minimum amount of so-called risk-based capital to increase their capacity to take on new risks (by selling more insurance products). Some products demand more capital than others.

A ceding commission is the fee a reinsurance company (in this case, Athene) pays to a ceding company (Jackson) for administrative, underwriting, and business acquisition expenses. Reinsurers collect premium payments from policyholders and give a portion to the ceding company, along with the ceding commission.

LIMRA SRI’s U.S. Annuity Sales Projections, 2020-21

Posted on June 18, 2020 by No Author -

A New Kind of Income Annuity

Posted on June 18, 2020 by Kerry Pechter -

The first baby boomers reached age 66 eight years ago, but still no one has brought to market a scalable, plug-and-play, broadly appealing retail financial product that middle-class Americans can use to convert savings into pension-like lifetime income streams.

While a variety of income products exist, they haven’t quite satisfied the diverse (and sometimes conflicting) demands of retirees, advisers, academics, regulators, and life insurance companies. Nothing checks enough of those boxes to fill the gap that defined benefit pensions used to fill in the wallets of American retirees.

But now a group of entrepreneurs in the Midwest think they’ve cracked the code.

Achaean Financial, a Lake Forest, Illinois-based financial product developer, with Ash Brokerage, an independent brokerage general agency based in Fort Wayne, Indiana, and a soon-to-be-named life insurer are launching an immediate index-linked annuity. Starting within a year of purchase, it generates monthly retirement income that can go up with inflation but never down.

This package may be unprecedented. The indexed annuity itself is called IncomePlus+ Indexed, or IP+ Indexed. It’s one of a pair of products (the other is an immediate variable income annuity, with an investment-holding sleeve or “separate account”) that former Lincoln Financial executive Lorry Stensrud has been developing for the better part of a decade. (Both versions of IP+ are protected under a patent originally issued by the U.S. Patent and Trademark Office in June 2014 with subsequent patents pending.)

In Tim Ash, Stensrud has found a distributor as enthusiastic about retirement income as he is. (Ash even uses the “D word”—decumulation—on his website.) The two firms have a non-exclusive partnership where IP+ and Ash’s proprietary JourneyGuide retirement planning software will be marketed together, but also separately, to Ash Brokerage’s 8,000 affiliated advisers and other advisory and distribution organizations.

“We’re at the cusp of rolling it out,” Tim Ash, CEO of Ash Brokerage, told RIJ recently.

Tim Ash

“Dozens of broker-dealers have expressed interest in IP+, and a few hundred advisers are licensing JourneyGuide,” he added. “We’re working with a well-known global financial services company and hope to announce a joint-venture with it that involves JourneyGuide. The expected underwriter of IP+ Indexed is an A-rated U.S.-based life insurer, to be announced in the coming weeks.”

As we did a year ago, RIJ is devoting much of its coverage in June to the topic of index-linked retirement products. The options strategies in indexed variable annuities (IVAs) were our focus on June 11. On June 4, we provided an analysis of first-quarter IVA sales, based on data from Wink, Inc. This week we write about a hybrid product that blends features of an indexed annuity and a single premium immediate annuity.

The method to our madness

Before we unpack the Ash-Achaean strategic partnership, let’s pause to consider a question that might be on your mind, especially if you’re a fee-based adviser: “Why annuities? Why insurance contracts? Why not rely on Modern Portfolio Theory (MPT) and diversify the clients’ risks among uncorrelated risky assets, like good old stocks and bonds?”

The short answer: Mortality credits and guarantees. Without an annuity, a retiree can’t accrue mortality credits (the extra income that comes from pooling longevity risk with other retirees) or get guarantees (which help retirees reserve their risk budgets for other opportunities). Low bond yields only make mortality credits more important. Guarantees help retirees sleep better at night.

But why an indexed annuity? Weren’t indexed annuities the bad boys of the insurance world? Yes, but times have changed. Most life insurers now see options (the reactor core of indexed annuities) as a safer, more productive way to get upside than either stocks or bonds, especially for the delivery of lifetime income. Now back to our story.

FIA engine on a SPIA chassis

Capturing mortality credits in IP+ Indexed was an essential design goal for Stensrud, Achaean’s CEO and a past retirement executive at Lincoln Financial. A SPIA can do that, but SPIAs didn’t meet Stensrud’s other design requirement: the ability to deliver rising income in retirement.

So, with Milliman actuary Tim Hill, Stensrud and his team welded an indexed annuity engine onto a SPIA chassis. The result is a SPIA that, like a fixed indexed annuity, captures part of the equity-market’s gains though the purchase of call options. IP+ Index also has a “surplus” fund to even out the monthly income across fat and lean years.

Lorry Stensrud

“Our edge is three-fold. It’s longevity-based, so you get mortality credits,” Stensrud said. “Benefit two is that we have the greatest potential for increasing income. Benefit three is the surplus account.”

As Hill described it, IP+ Indexed works like this: A contract owner’s purchase premium would go into a life insurer’s general fund. That premium, plus the growth of the general fund, finances lifetime income that can’t go down, plus options on an equity index. When the index rises, those options appreciate in value and supplement the client’s base income.

“We envision a three-year call option to start,” Hill told RIJ. “For the first three years [the client’s] income wouldn’t increase. At the end of the third year, we’ll look at how the index performed. If, for instance, the index were up 9% at the end of the third year, we would divide that by three and get 3%. In years four, five and six, we’d give the client the lesser of 3% or the inflation rate for the previous year.”

If inflation were one percent in the fourth year, for example, the client’s income would go up by 1%. The other two percent would go into a “smoothing” account (the surplus account), to grow at the same rate as the general fund. In years when equity gains don’t cover inflation, “we can add money from the smoothing account,” Hill added. “The goal is to deliver a smooth, well behaved, gradually increasing income stream using index methodology.

“Retirees might put 20%, 30% or 40% of their nest egg into IP+, to provide a layer of income on top of Social Security,” he said. “Payments would start out about five to eight percent lower than a straight SPIA, but higher than an inflation-adjusted SPIA. Then they’d increase over time.” Each increase establishes a new minimum guaranteed income level.

“As the surplus account grows, it can be used to offer income increases greater than inflation since the purpose of the product is to provide retirement income and not to accumulate a store of funds. Any balance in the surplus account becomes a death benefit. It is always the policyholder’s money,” said Lawrence Ryan, Achaean’s executive vice president.

IP+ Indexed is also more liquid than a SPIA. “If your circumstances change, you can take money out,” Hill said. “If you took out 20% of your money, for instance, your payments would go down by 20%. The total cash surrender value would be the [original] premium, minus income already paid out, with a market-value adjustment” for interest rate risk.

No trade-offs

Over the last several years, while Stensrud and Hill were perfecting their products and looking for a way to bring them to market, Ash was fine-tuning JourneyGuide, a tool designed not only for planning but for providing all the tests and documentation that registered reps at broker-dealers are expected to need in order to comply with the SEC’s “best interest” ethical standard for advisers, which goes into effect at the end of this month.

Though JourneyGuide is product-agnostic, Ash was also looking for income annuities that would improve retiree outcomes. So, after Stensrud and Ash Brokerage had their first meeting 18 months ago, Ash asked his team (headed by former Goldman Sachs financial engineer Michael Smith) to run Stensrud’s product through a JourneyGuide stress test.

JourneyGuide uses Monte Carlo simulations to see how well a product, relative to competing products or strategies, improves the size and sustainability of client’s income in retirement. “We do over five million calculations to test a product’s performance over poor markets, average markets, and bull markets,” Ash told RIJ.

“The tests show us the trade-offs in the product. The interesting thing about IP+ Indexed was that there were no trade-offs. For people who want income now, it outperformed just about every other instrument in the annuity space.” The competition included indexed annuities with guaranteed lifetime withdrawal benefits that deliver optimal income only after a 10-year waiting period.

A survey of Ash advisers showed demand for IP+ Indexed, at least in principle. At a recent Ash Brokerage Retirement Income Summit, 41 out of 51 advisers said they would be “highly likely” (based on a scale of 7 or more out of 10) to offer the product.

With respect to adviser compensation—always a factor in the annuity distribution world—IncomePlus+ Indexed can be sold either by commissioned registered reps or fee-based advisers. JourneyGuide uses a tool, created by CANNEX, to calculate the net present value of the expected annuity payments at any point during the life of retiree. The adviser can then apply his fee ratio to that number.

Satisfying ‘Reg BI’

With the Security and Exchange Commission’s Regulation Best Interest going into effect at the end of this month, advisers need products that demonstrably serve a client’s “best interest.” As those who familiar with the world of annuity sales know, advisers often recommend that clients swap old annuities for new ones, especially when there’s no early-withdrawal penalty for doing so. These swaps—called “1035 exchanges”—have long been a large source of new annuity sales.

To discourage churning by advisers, however, regulators require that replacement contracts be more valuable for the contract owner than the old contracts. That’s sometimes difficult to do, in part because older annuities—especially variable annuities with living benefits—are often more generous than newer ones.

IP+ Indexed is designed to solve this problem. Monte Carlo simulations have shown that it can deliver more monthly income, with a better chance of keeping pace with inflation, than the guaranteed lifetime withdrawal benefits on either variable annuities or indexed annuities.

What fees are associated with this product? As with most annuities that are sold by commission-taking advisers, the manufacturing and distribution costs are baked into the payout rates. The insurance company might charge 1.5% of the client’s account balance each year (about a third of what it earns on the client’s investment) for overhead and guarantees. Advisers might get either a 0.75% (of principal) trail each year by the insurer (if they work on commission) or 1% a year by the client (if they are fee-based) for ongoing advice.

Costs aside, IP+ Indexed, coupled with JourneyGuide, could be the solution that breaks through the insurance–investment barrier, and convinces a significant number of advisers and clients that combinations of insurance and investments are the most efficient way to finance retirement.

“This is the industry challenge,” said Ash. “Advisers still don’t know how good annuities are and they don’t know how to integrate them into financial plans.” But he believes the JourneyGuide software can show advisers how to do that, whether they use IP+ Indexed or another product in their plans. “We didn’t build JourneyGuide to sell annuities,” he said. “But we did prove that certain annuities may dramatically improve retirement outcomes.”

For previous RIJ articles on Achaean Financial and JourneyGuide, click here and here, respectively.

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