Americans are generally ill-prepared for retirement. A recent study by Ernst & Young found that almost three out of five new middle-class Americans who are near or at retirement face a very real danger of outliving their savings. The recent financial crisis has made the situation even worse. According to the 12th Annual Transamerica Reitrement Survey released in June 2011, un/underemployed workers have overwhelmingly tapped into their personal and retirement savings are are less confident in their ability to achieve a financially secure retirement.
Policy-makers are encouraged to consider new incentives and education programs to help individuals save through the workforce as well as personally, and to encourage more Americans to consider converting their retirement savings into a guaranteed lifetime income streem when they retire. Transamerica companies have supported proposals for strengthening the Savers Credit for low income workers and increased participation of small employers in multiple employer plans.
Following are key congressional proposals that Transamerica supports:
The SAVE Act, H.R. 1534, introduced by Representatives Kind (D-WI) and Reichert (R-WA), would permit employers to voluntarily auto-enroll their employees, create a voluntary auto-IRA, reform multiple employer plan (MEP)rules to facilitate employer adoption of MEPs, and provide for an annuity illustration in qualified plans.
The Lifetime Income Disclosure Act was introduced in the Sentate (S.267) by Senators Bingaman (D-NM), Isakson (R-GA) and Kohl (D-WI) and in the House by Representatives Holt (D-NJ), Petri (D-WI), Kind (D-WI) and Reichert (R-WA). This bill would require qualified retirement plans to state on employees account statements their account balances as a lifetime annuity equivalent value in addition to a lump sum.
In an effort to better understand the public interest in securing a guaranteed lifetime income stream in retirement, in February, 2010, the Department of the Treasury and the Department of Labor published a Request for Information regarding Lifetime Income Options for Participants and Beneficiaries in Retirement Plans (the “RFI”). AEGON USA submitted its response in April. We expect either legislation or regulatory guidance to be proposed next year as a result of the RFI comments.
AEGON also supports initiatives that would facilitate the use of annuities in workforce savings plans and encourage plan sponsors to include annuities as distribution option. In addition, Transamerica supports measures to improve disclosure to consumers, help ensure sales recommendations are suitable, and make sure annuities are sold by individuals using proper credentials. Transamerica participates in the Americans for Secure Retirement, a coalition of various groups supporting incentives for annuitization. The ASR web site (www.paycheckforlife.org) provides valuable information on the retirement savings crisis and the need for retirement income security.
Transamerica companies participate in a number of trade association groups and coalitions supporting policies to increase savings through the workforce and individually and to educate individuals about the ability to convert a portion of their savings into a guaranteed lifetime income stream and to encourage them to annuitize. These trade associations and coalitions include the ACLI, the Institute for Retirement Income, the Investment Company Institute, the American Benefits Council Coverage Task Force and the Americans for Secure Retirement. Attached are links to key white papers developed by the Coverage Task Force on the success of defined contribution plans, such as 401(k) plans, in helping individuals save for retirement, the tax incentives which are critical to that success, as well as proposals for increasing opportunities for individuals to save through their employer.
Finally, following are links to Transamerica provided information. The Transamerica Center for Retirement Savings (www.tcrs.org) provides extensive survey information regarding savings from the perspective of the employer and employee. Transamerica Retirement Management Secure Path for Life (www.securepathforlife.com) provides fun and informative videos on the need for retirement savings and how to pay yourself in retirement. TRS, DIA [and TRM] websites provide retirement savings calculators and all of the Transamerica business sites provide information regarding their products and services to help people achieve financial and retirement security.