We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (21,155)
  • Industry Conferences (2)
  • Industry Job Openings (35)
  • Moore on the Market (414)
  • Negative Media (144)
  • Positive Media (73)
  • Sheryl's Articles (800)
  • Wink's Articles (353)
  • Wink's Inside Story (274)
  • Wink's Press Releases (123)
  • Blog Archives

  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • September 2008
  • May 2008
  • February 2008
  • August 2006
  • Why The Search For Alternatives Is Good For FIAs

    February 18, 2015 by Linda Koco, linda.koco@innfeedback.com

    The increasing interest in alternative retirement plans is opening doors for greater use of fixed index annuities (FIAs).

    That’s according to Jim Poolman, the executive director of the Indexed Annuity Leadership Council (IALC), who pointed to use of FIAs in teachers’ defined contribution plans, such as 403(b)s, as an example. Two of IALC’s member companies are active in this market, he said in an interview.

    Formed in 2011, the IALC is a trade group that focuses on providing education about FIAs to the general public, policymakers, the media and others. It is comprised of five FIA carriers.

    The underfunding problems in traditional defined benefit (DB) pension plans is fueling the search for alternative forms of saving for retirement, said Poolman, who is a former North Dakota Commissioner of Insurance.

    Looking for options

    The underfunding problems are long-standing, especially following the last recession, and have reached the point where many employers who still have DB plans are looking for options.

    Despite market returns of $81 billion, the 100 large corporate pension plans that Millman follows saw a $105 billion increase in deficit in their pension funded status, the researcher reported in January.

    Underfunding issues are a particular problem in state government pension plans, where taxpayers and/or employees may be asked to pay more to catch up their DB plans, Poolman said. “Taxpayers are not always happy about that.”

    So the search for alternatives is on. Poolman noted that one of the often-cited alternatives is defined contribution (DC) plans like 401(k)s. They have been the DB alternative of choice for employers leaving the DB market for many years. Assets in these plans have increased to $5.9 trillion at year-end 2013 from $7 trillion in 1995, according to the 2014 Investment Company Fact Book.

    Other options that employers are considering are 1) to offer employees who are in the DB plan a lump sum buyout; and/or 2) to purchase an annuity to take over the benefit funding.

    Those options have legs. Roughly half (47 percent) of nearly 250 employers representing 6 million employees told Aon Hewitt recently that they are planning to initiate a lump-sum window in 2015 for terminated vested participants. In addition, more than one-fifth (21 percent) said they are very or moderately likely to explore purchasing annuities for some participants.

    Poolman sees FIAs fitting into this world of change for businesses that want alternatives.

    One possibility is for a business to focus on offering retirement education programs that inform employees of the many ways they can save for retirement. This education would include, but not be limited to, discussion about FIAs with guaranteed lifetime withdrawal benefit (GLWB) riders, he said.

    An employer could offer to contribute to the employees’ FIAs with GLWB, Poolman said, adding “this doesn’t have to be in a qualified plan.”

    As he pictures it, a business can promote the importance of retirement savings whether it’s inside a qualified plan or somewhere else, such as a retail FIA. The business would focus on education, he said.

    “The employer won’t say, ‘here’s an FIA for you,’” he said. “Rather, the employer will say, ‘think about your financial future.’”

    More markets for FIAs

    Three other areas for growing FIA sales are rollovers, the millennial market and the women’s market, Poolman said.

    Rollovers. When they leave an employer, some people will not want to keep their money in the former employer’s DC retirement plan, he said, and those in the pre-retirement years of 55 to 65 will likely be looking for options to turn that money into a lifetime income stream. “The FIA can provide that, and the guarantee will be attractive to them,” he predicted.

    Millennials. If they are working at companies that are changing their existing plans or no longer offering a retirement plan altogether, millennials will look for other places to save. They will search for risk-averse growth potential, Poolman said.

    Assuming that millennials have been exposed to education about the role of FIAs in financial and retirement planning, “I think the FIA will be attractive to them,” he said. This is because of the product’s upside potential and downside protection, along with its ability to provide a guaranteed lifetime income stream in retirement.

    The industry will need to take responsibility for providing this exposure, Poolman contended. Some suggestions include providing educational materials and resources about FIAs on websites and in electronic media geared toward millennials. He pointed to Twitter, postings at the IALC website and content hosted elsewhere too.

    Women. Poolman believes women will become a bigger part of the FIA market, especially as spousal retirement benefits dwindle. “Many women are employed today, and they are recognizing that their existing plans are not designed to cover their desired level of retirement income,” he added. So they will be looking for alternatives to boost that level, he said.

    The spur of state pension plans

    In state government, “states are really struggling with their pension plans,” Poolman said. As a result, they are looking into offering other options for employees to consider. These are options that will enable employees to take “closer control” of their finances within the plans.

    One example he cited is his home state of North Dakota. It is slowly opening up to discussion about allowing certain classes of employees to opt out of the state’s defined benefit plan for a 401(k) plan and a supplemental 457 plan, he said.

    Some states already have enacted laws along those lines. In 2012, for instance, the National Conference of State Legislatures said seven states had enacted “sweeping structural pension reforms” that year. One of them, Virginia, established a hybrid plan that requires each member to make contributions to both the DB and the DC components.

    Poolman believes such changes help spur people to think about alternatives, which might include FIAs, perhaps as supplements to other retirement resources.

    Originally Posted at Annuity News on February 18, 2015 by Linda Koco, linda.koco@innfeedback.com.

    Categories: Industry Articles
    currency