In what may prove to be a boon both for consumers and for agents looking for more annuity leads, the Departments of Labor and Treasury recently announced plans that should help retirees save more of their money.
The departments proposal would help reduce regulatory burdens for retirees so that they will be more willing to invest in products that will help contribute to their retirement savings, such as annuities and 401(k)s.
Tim Geithner, secretary of the treasury department, said the proposal should encourage consumers to put a greater focus on their own long-term welfare.
"When American workers take the responsible step of saving for retirement, we should do all we can to provide them with sensible, accessible choices for managing their hard-earned savings," said Geithner. "Having the ability to choose from expanded options will help retirees and their families achieve both greater value and security."
One of the proposed changes that may incentivize more individuals to invest in annuities is removing a regulation that may have been preventing some individuals from purchasing a "longevity" annuity. By removing this obstacle, retirees would be better able to purchase a guaranteed source of income that they would be able to draw on throughout their latter years of life.
The departments are also looking to make partial annuities more attractive by giving policyholders more avenues in which they can cash out on their annuity. Instead of the all-or-nothing approach, the government says pension holders will be able to take a lump sum but also receive income from their annuity throughout their retirement.
Cathy Weatherford, president of the Insured Retirement Institute, said the government's proposed actions are encouraging for the life insurance industry and consumers in general.
"The steps taken today by the Departments of Labor and Treasury underscore their commitment to broaden the availability of lifetime income options so that all Americans can attain retirement security," said Weatherford. "We are encouraged by the guidance package … that includes steps to encourage partial annuity options, remove barriers to purchasing annuities, and clarify rules that apply when plan sponsors offer lifetime income options under their plans."
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