ࡱ> JLIq` /bjbjqPqP 4<::'^$h|tgggggggggggg @5̓"g.0^g;"ggZLrg\M] ^gggg< <   INCLUDEPICTURE "http://assets.businessweek.com/images/bw-logo.png" \* MERGEFORMATINET  January 8, 2010 Retiree Annuities May Be Promoted by Obama Aides The government is looking at ways to promote the conversion of 401(k)s and IRAs into steady payment streams after a significant decline in plan balances By Theo Francis (Bloomberg) The Obama administration is weighing how the government can encourage workers to turn their savings into guaranteed income streams following a collapse in retiree accounts when the stock market plunged. The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary  HYPERLINK "http://search.bloomberg.com/search?q=Phyllis+C.+Borzi&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" Phyllis C. Borzi and Deputy Assistant Treasury Secretary  HYPERLINK "http://search.bloomberg.com/search?q=Mark+Iwry&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" Mark Iwry, who are spearheading the effort. Annuities generally guarantee income until the retiree's death, and often that of a surviving spouse as well. They are designed to protect against the risk that retirees outlive their savings, a danger made clear by market losses suffered by older Americans over the last year,  HYPERLINK "http://search.bloomberg.com/search?q=David+Certner&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" David Certner, legislative counsel for AARP, said in an interview. "There's a real desire on a lot of people's parts to try to encourage something other than just rolling over a lump sum, to make sure this money will actually last a lifetime," said Certner, legislative counsel for Washington-based AARP, the biggest U.S. advocacy group for retirees. Promoting annuities may benefit companies that provide them through employers, including ING Groep NV ( HYPERLINK "http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=INGA:NA" INGA:NA) and Prudential Financial Inc. ( HYPERLINK "http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=PRU" PRU), or sell them directly to individuals, such as American International Group Inc. ( HYPERLINK "http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=AIG" AIG), the insurer that has received $182.3 billion in government aid. Balances Fall The average 401(k) fund balance dropped 31 percent to $47,500 at the end of March 2009 from $69,200 at the end of 2007, according to a Fidelity Investments review of 11 million accounts it manages. The  HYPERLINK "http://www.businessweek.com/apps/quote?ticker=SPX%3AIND" Standard & Poor's 500 Index tumbled 46 percent in that period. The average balance of the Fidelity accounts recovered to $60,700 as of last Sept. 30 as the stock market rebounded. There is "a tremendous amount of interest in the White House" in retirement-security initiatives, Borzi, who heads the Labor Department's  HYPERLINK "http://www.dol.gov/ebsa/" \t "_blank" Employee Benefits Security Administration, said in an interview. In addition to annuities, the inquiry will cover other approaches to guaranteeing income, including longevity insurance that would provide an income stream for retirees living beyond a certain age, she said. "There's been a fair amount of discussion in the literature taking the view that perhaps there ought to be more lifetime income," Iwry, a senior adviser to Treasury Secretary  HYPERLINK "http://search.bloomberg.com/search?q=Timothy+Geithner&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" Timothy Geithner, said in an interview. Lump Sums "The question is how to encourage it, and whether the government can and should be helpful in that regard," Iwry said. While traditional defined-benefit pensions were paid out as annuities, providing monthly payments for retirees and often their spouses, workers increasingly are taking advantage of options to receive lump-sum distributions. Only 2 percent of 401(k) plan participants convert retirement savings into an annuity on retirement, according to a July 2009 report from the Retirement Security Project, a joint venture of Georgetown University's Public Policy Institute and the Brookings Institution in Washington. A survey of 149 companies released on Dec. 17 by employee-benefits consultant Watson Wyatt Worldwide, now part of Arlington, Va.-based Towers Watson & Co. ( HYPERLINK "http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=TW" TW), suggested that about 22 percent of employers with retirement savings plans offered retirees the choice between an annuity and a lump-sum distribution. Annuity Sellers Government success in getting workers to move retirement assets into annuities may prove profitable for insurers that sell annuities,  HYPERLINK "http://search.bloomberg.com/search?q=Anne+Mathias&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" Anne Mathias, policy research director for Washington Research Group, a policy analysis unit of Concept Capital, said in an interview. Retirement plans, including 401(k) accounts, held $3.6 trillion in assets at the end of the second quarter of 2009, while annuity investments of all kinds totaled about $2.3 trillion,  HYPERLINK "http://www.ici.org/pdf/09_q2_retmrkt_update.pdf" \t "_blank" according to figures from the Washington-based Investment Company Institute, a trade association for asset managers. The top sellers of individual annuities in the U.S. include AIG, MetLife Inc. ( HYPERLINK "http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=MET" MET), Hartford Financial Services Group Inc. ( HYPERLINK "http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=HIG" HIG), Lincoln National Corp. ( HYPERLINK "http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=LNC" LNC) and New York Life Insurance Co., according to figures from the American Council of Life Insurers for 2008. The top group-annuity sellers include ING, Prudential Financial, MetLife and Manulife Financial Corp. Under Fire Asset managers are concerned the government may go too far in encouraging annuities, said Mike McNamee, a spokesman for the  HYPERLINK "http://www.ici.org/" \t "_blank" Investment Company Institute. Seven in 10 U.S. households would object to a requirement that retirees convert part of their savings into annuities, according to a survey the group released today. "Households' views on policy changes revealed a preference to preserve retirement account features and flexibility," the institute said in a report. The institute also said annuities have received support from academic research and "it is unclear why individuals usually forego the annuity option" even when it is available. The survey didn't ask about potential efforts by the government to encourage voluntary use of annuities. Annuity sales to individuals have come under regulatory scrutiny in recent years over the size of sales commissions and whether some varieties are suitable for older investors. Social Security  HYPERLINK "http://search.bloomberg.com/search?q=John+Brennan&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" John Brennan, the former chairman of Vanguard Group, the Valley Forge, Pennsylvania-based mutual-fund company, criticized annuities today as often expensive and offering little inflation protection. Americans already benefit from "the best annuity in the world, which is Social Security," Brennan said in an interview on Bloomberg Television. AARP's Certner said policy makers could avoid many of those pitfalls by encouraging the use of group annuities, which are bought by employers rather than individuals and often carry lower fees, or using approaches that provide retirement income without commercial annuities. Adding lifetime income to 401(k) plans won't be sufficient for many workers because they can't, or don't, save enough to live on in old age, and Social Security often proves inadequate as more than a safety net, said  HYPERLINK "http://search.bloomberg.com/search?q=Karen+Ferguson&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" Karen Ferguson, director of the Pension Rights Center in Washington, D.C. Senate Bill "It's a great idea, but how much are people really going to get out of it?" she said. A better approach would be to give employers incentives to revive defined-benefit pensions, which have languished as employers have focused on cheaper and more flexible 401(k) plans, Ferguson said. One proposal raised by Iwry as co-author of a paper while at the Retirement Security Project, before joining the administration, has reached Congress. A bill requiring employers to report 401(k) savings both as an account balance and as a stream of income based on an annuity was introduced on Dec. 3 by Senators  HYPERLINK "http://search.bloomberg.com/search?q=Jeff+Bingaman&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" Jeff Bingaman, a New Mexico Democrat,  HYPERLINK "http://search.bloomberg.com/search?q=Johnny+Isakson&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" Johnny Isakson, a Georgia Republican, and  HYPERLINK "http://search.bloomberg.com/search?q=Herb+Kohl&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" Herb Kohl, a Wisconsin Democrat. X[\m9 H J " + , & '  $%B:;ǽDZuubu$ *h<>h<>0JB*mH phsH j *h<>h<>UmH sH !h<>h<>0JB*mH phsH jh<>h<>UmH sH h<>h<>mH sH  *h<>h<>mH sH h<>0JmH sH h<>mH sH h<>0JmH sH h<>0JmH sH h<>B*mH phsH jh<>B*UmH phsH &\o9 J $  'DstEaB^ O!!f#gd<>gd<>gd<>gd<>gd<>/UVYZvws01Z[Z[]^ KLXY   / 0 !!!!q"r"""""# *h<>h<>mH sH h<>h<>mH sH !h<>h<>0JB*mH phsH jh<>h<>UmH sH Jf##%%%')**,//gd<>gd<> #$%%&&&&))****H-I-....-.......////////h<>!h<>h<>0JB*mH phsH jh<>h<>UmH sH h<>h<>mH sH  *h<>h<>5mH sH !21h:p<>/ =!"#$% Dd|  c XA$bw-logoBusinessWeek Logobԣ])A@Dcnԣ])A@PNG  IHDR8tEXtSoftwareAdobe ImageReadyqe<`PLTEmrMR 29#+",3?EZ`7>z IDATxZۖ* hRJ-/OHta,鵺E a'a'0#s9`׶{F. [t`p Wpd%POԨDmL+|0S˷lMB1$uod#J?dJHP 6`F `*Ki HHCX'\м-7~k4iV7` t @kiZp@\$~G w3rY{UenjJ4H'Kdq&[RmNK" 2e0; 8rP8Y\Zȑz8i_݀CBRj%xr(.0GBPxŇDE "!j)O*/p/: ׏nhH$LlFdcf@yLb\{LD-R4l hy rn3hLjhL @ƱitPrU33C` ܳ1V0%57j fI DLPI: } 9:.ݷ0cޙ{-S-`Tj=`,Gae`\v N wIh IL2l.Z?O@_l! EdηLjwa6 xGy/tdW5Ҕ+=/= vP$Yk'?L0^`<=yL@,qʤ>&剾ͧ`T~3,5M\ _jkCYxԞ;- 8PyuxH/ >f'vQנM%Gq/œX7Ib'No8J$]=u;͏`"I0 h)_ND]}CG[zh(+Nہ[`JXCXe3!,!IwV2A8/+{>ӕ)9ؿ)??3"%FDAKyH )x0}%Y.wd-&ik / n;[ZSM O͸]1_B8AeXg6Q99䲂V`f3;a<ΧT 9Vw e9@U ּ },5d&͐`lhhiH>0o 咖΍>O<aLa* 殜B5?s=P29j+d^ϼ8XPG-|6{;۹uP(l E[S1Ǭ6&c i) )$\6fǽ\gg;~L9tSL; mM1͘] s Heading 1dd@&[$\$5CJ0KH$\aJ0N`"N <> Heading 2dd@&[$\$5CJ$\aJ$N`2N <> Heading 3dd@&[$\$5CJ\aJDA@D Default Paragraph FontRi@R  Table Normal4 l4a (k@(No List4U`4 <> Hyperlink >*ph"o" <>strap o <>dateB^`"B <> Normal (Web)dd[$\$0a`10 <> HTML Cite6]' <\o9J$'D s t EaB^ Of!""$''0P000000000(00000(00000(0000(00000(0000(0000\o9J$'D s t EaB^ Of!""$''@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0'@0' 0(#/f#//XZ+&$  : U Y v 0 Z Z]KX/q!""H%&&-&&&''''CXXXXXXXXXXXXXXXXXXXXX V&lV&V&V&,V&lV& V&V&,V&lV&V& !! QQ##'  %% [[$$' B *urn:schemas-microsoft-com:office:smarttagscountry-region=*urn:schemas-microsoft-com:office:smarttags PlaceType= *urn:schemas-microsoft-com:office:smarttags PlaceNameV *urn:schemas-microsoft-com:office:smarttagsplacehttp://www.5iantlavalamp.com/h*urn:schemas-microsoft-com:office:smarttagsCity0http://www.5iamas-microsoft-com:office:smarttagsi*urn:schemas-microsoft-com:office:smarttagsState0http://www.5iamas-microsoft-com:office:smarttags l.b   \a UY&$*$''33^mn'''w] ] ]PskWsz`"] ]PkW<>@ĥ'@UnknownGz Times New Roman5Symbol3& z Arial"qhcFdFdF!H!H!24''2QHX)?<>2  Robert M. Cerrito Robert M. CerritoOh+'0 ( H T ` lx  Robert M. Cerrito Normal.dot Robert M. Cerrito1Microsoft Office Word@캃@_ʓ@ɓ@(̓!՜.+,D՜.+,, hp|   H'  Title 8@ _PID_HLINKSA~P?http://search.bloomberg.com/search?q=Herb+Kohl&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1_PN<http://search.bloomberg.com/search?q=Johnny+Isakson&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1_H9http://search.bloomberg.com/search?q=Jeff+Bingaman&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1_ 6http://search.bloomberg.com/search?q=Karen+Ferguson&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1_;*3http://search.bloomberg.com/search?q=John+Brennan&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1_o#0http://www.ici.org/_dm-Shttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=LNC_cm*Shttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=HIG_o{'Shttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=MET_$G$0http://www.ici.org/pdf/09_q2_retmrkt_update.pdf_52!http://search.bloomberg.com/search?q=Anne+Mathias&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1_ Rhttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=TW_uihttp://search.bloomberg.com/search?q=Timothy+Geithner&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1_R http://www.dol.gov/ebsa/_{68http://www.businessweek.com/apps/quote?ticker=SPX%3AIND_cdShttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=AIG_xgShttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=PRU_k7 Whttp://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=INGA:NA_G http://search.bloomberg.com/search?q=David+Certner&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1_Xhttp://search.bloomberg.com/search?q=Mark+Iwry&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1_,5http://search.bloomberg.com/search?q=Phyllis+C.+Borzi&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1_  !"#$%&()*+,-./012356789:;=>?@ABCDEFGHKRoot Entry F5̓MData 1Table'WordDocument4<SummaryInformation(4DocumentSummaryInformation8<4CompObjq  FMicrosoft Office Word Document MSWordDocWord.Document.89q