In the April issue of Investment Advisor, we featured an article asking, “Does the Federal Government Have a Future in Annuities?” The article described a plan put forth by professors Terrance Odean at the University of California, and Henry Hu at the University of Texas for government-sponsored annuities. The following is a letter in response to that article.
I read with great interest the referenced article. It was very well written and very timely. With the transition from DB plans to DC plans, and with the groundswell of baby boomers reaching retirement, this is an important topic and one that I have done considerable research on.
Following the Pension Protection Act of 2006, retirement plan regulators have pursued a pension plan reform agenda and the current administration has encouraged annuities to be considered as a distribution alternative. The recent economic crisis has caused retirement plan participants to question the financial viability of investment providers. Banks and insurance companies alike have faced failure and investors have reasonably questioned the safety of their money.