President Obama did not end up promoting annuities during the State of the Union address, but his administration seems to be preparing to support the income planning concept.
Administration officials raised the annuity industry's hopes about the address Monday, when they held a Middle Class Task Force meeting a release a fact sheet calling for the government to promote "the availability of annuities and other forms of guaranteed lifetime income, which transform savings into guaranteed future income."
The fact sheet drafters also proposed creating a new system of automatic individual retirement accounts for workers who do not have employer-sponsored retirement plans, and they recommended steps such as giving employers and plan participants more detailed, easier-to-understand information about 401(k) plan fees.
Several trade groups and news organizations, including the NU Online News Service, took the release of the fact sheet as a sign that Obama would make retirement security a focus of the State of the Union address.
During the State of the Union address itself, Obama mentioned his retirement savings proposals only in passing, saying that the administration will try to make "it easier to save for retirement by giving every worker access to a retirement account."
Trade and business group representatives interviewed said they were not too disappointed by the lack of retirement security content in the State of Union address but are eager to learn more about how the administration intends to go about promoting the availability of annuities and other forms of guaranteed lifetime income. The groups are hoping details will come out around Feb. 1, when the administration releases its fiscal year 2011 budget proposal.
"We know that annuities are a growing interest to the Obama administration," says Whit Cornman, a representative for the American Council of Life Insurers. "I expect we'll soon see more activity on this topic."
The U.S. Treasury Department and the U.S. Department of Labor to has been getting ready to issue a request for information about strategies for using annuities in defined contribution plans, Cornman says.
Staffers at the American Benefits Council, Washington, knew before Obama's speech started that retirement security programs details, such as details about the automatic IRA proposal, were probably going to come out after the State of the Union address, according to Jason Hammersla, a council spokesman.
"Pension policy tends to be very wonky and technical," Hammersla says. "It doesn't make for great theater."
At the Insured Retirement Institute, Washington, a group that represents annuity issuers, "the big news for us was on Monday," says Chris Paulitz, an IRI vice president. "To have the White House's full backing and promise to promote annuities, that's huge…. When the government backs a financial product, people trust it."
Even if the Obama administration simply decided to educate current and former government employees about the benefits of using annuities, that would be welcome, Paulitz says.
The Obama administration has been open to talking to the people in the annuity industry, and J. Mark Iwry, a senior advisor to Treasury Secretary Timothy Geithner who works on retirement issues, flew up to Boston to speak an IRI conference, Paulitz says.
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