Part I: ‘Keep Your Hands Off My 401(k).’ Based on their recent e-mails to the Labor Department's RFI, some Americans think Uncle Sam wants to confiscate private savings.
Many factors are driving the increase in indexed annuity sales: More manufacturers, better products, more distributors, competitive commissions, aging boomers, and relaxed regulation. But does the bubble contain the seeds of its own deflation?
Israel has found that even a mandatory defined contribution system can’t resolve all of the behavioral, economic, or administrative issues that prevent low-income and minority workers from saving for retirement. (Photo: Mahane Yehuda market in Jerusalem.)
This week, RIJ received a press copy of “What Advisors Want from Annuity and Insurer Providers-2019,” a study by Practical Perspectives, a Boxford, MA-based financial services market research firm.
In print, on radio and on TV, Rush Limbaugh and Newt Gingrich helped fuel the rumor that 401(k) plans were under attack.
In the final week or two of its RFI on in-plan annuities, the Labor Department began receiving comments from the industry that has a big stake in the way 401(k) assets are distributed.
Some behavioral finance experts believe that principles of psychology could be used to boost annuity sales.
"Premiums have actually declined, and rebuilding them will be a challenge," said Conning's Scott Hawkins.
Individual annuity gross sales for the quarter just past were $4.9 billion (up from $2.2 billion a year ago), while net sales were $3.2 billion (up from $643 million a year ago.)
"The life insurance companies have a big opportunity here," said Ken Mungan of Milliman. "They should jump on it."
Today, the police, harbor workers, security services and journalists for the state media can retire in their 50s. Starting in 2013, these privileges will be abolished.
The new living benefit allows contract owners to withdraw enough to offset all or part of the income tax on their distributions.