The Link Between Annuities And Retirement Planning
April 9, 2014 by Linda Koco
National Retirement Planning Week 2014 has arrived, with the avowed purpose of promoting and increasing “the need for comprehensive retirement planning.”
That statement of purpose is taken straight from an announcement by the Insured Retirement Institute (IRI), the Washington trade group that leads a coalition of retirement interests that is coordinating the week.
There is nothing in that statement or the related promotional materials that mentions use of annuities for retirement planning. In fact, the promotional materials appear to be “product agnostic.” They’re all about retirement planning and associated topics, such as financial literacy, retirement security, savings, Social Security, retirement planning tools and calculators, and the like.
And yet a handful of state insurance departments are using the occasion of National Retirement Planning Week as an opportunity to talk about annuities — and/or to caution about annuities. More on that in a second. First a few notes about the week.
National Retirement Planning Week
It runs from April 7 to 11, and is being led by the National Retirement Planning Coalition (NRPC). This is a coalition of retirement-minded groups, many of whom are supplying or sponsoring content, educational sessions, webinars, and various other activities related to the topic.
A quick glance at the NRPC partner list helps explain why the promotional efforts have stayed focused on comprehensive financial planning rather than branching out into financial product talk.
NRPC’s 35 or so supporting partners form a type of who’s who of nationally known groups with an interest in strengthening retirement prospects for Americans .
Some of them have no overriding or special interest in individual annuities, however. These include the American Institute of Certified Public Accountants (AICPA), American Savings Education Council (ASEC), Center for Retirement Research at Boston College and Financial Services Roundtable (FSR), among several others.
True enough, many coalition partners are insurance organizations, and some of those groups do have strong annuity interests. But they’re at this particular table with non-insurance groups too, and everybody is unified via coalition work around holistic retirement planning.
So of course, NRPC is not going to tie the week to annuities.
The insurance departments
But then, it’s being done anyhow, via certain insurance departments. Take a look at some of the press
releases the departments are putting out:
Three states reference National Retirement Planning Week and then launch into a discussion of annuities. In these three instances, the discussions are mostly informational, particularly Missouri’s commentary on how annuities can provide steady income after retirement.
Delaware’s release — Delaware Commissioner Stewart Provides Information About Annuities During National Retirement Planning Week — is mostly informational, too, but it includes a cautionary “don’t be pressured” paragraph. Likewise with Tennessee’s contribution, Is an Annuity Right For You?
Then there is California. In Annuities are good retirement tools, but exercise caution, the California department provides annuity information mixed in with several cautionary statements and suggestions on how consumers can protect themselves from being “taken advantage of.”
Of the four documents, California’s reads more like an alert than an informational piece. If the intention was for consumers to associate retirement planning with annuities and caution, the effort was likely successful. Regulators, after all, see their mission, where consumers are concerned, as protection as well as education.
Unfortunately, in these four states, there was little discussion from the insurance department about consumer need for comprehensive retirement planning, either pro or con or balanced between the two. Since the organizers of National Retirement Planning Week aligned around the comprehensive planning message, they must be at least a little disappointed in this turn of events.
But then, annuities are sometimes/frequently a part of the retirement planning discussion, so to the extent that basic information was delivered in a balanced way, these state insurance department messages may serve the ultimate purpose in an indirect way.
Worth noting is that several other states have issued statements in support of the week but they make no references to annuities at all. These states include, but are not limited to, Arkansas, Iowa and Kansas, and more states may join them as the week unfolds.
All this goes to show, once again, that state regulators go their own direction, and it’s not always in the same way. They have their own laws. They have their own priorities. The many organizations who have joined in on this major National Retirement Planning Week initiative, which becomes more full-featured and intentional every year, may want to allow for that in the planning next time around — to the extent possible.
Linda Koco, MBA, is a contributing editor to AnnuityNews, specializing in life insurance, annuities and income planning. Linda may be reached at linda.koco@innfeedback.com.
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