The National Association of Insurance Commissioners are wading into the retirement security issue with a new working group that is kicking off with a very broad charge.
The Life Insurance and Annuities Committee established the Retirement Security Working Group during the NAIC Summer Meeting in New York City earlier this month. Stephen Taylor, insurance commissioner for the District of Columbia, is serving as the working group’s first chairman.
“This is one of the more important issues that we as a country face," said Iowa Insurance Commissioner Doug Ommen during the New York meeting. "I would describe this as an ambitious work plan."
Taylor led a lengthy discussion on things the group could undertake, such as developing a continuing education (CE) component requirement for producers that includes needs analysis and suitability, including a draft of 30 new exam questions.
Likewise, Taylor suggested developing an anti-fraud program, facilitating a forum for the industry to communicate, and even partnering with the Interstate Insurance Product Regulation commissioner for the purpose of developing new lifetime income products.
The A Committee voted unanimously to create the working group, whose charge is to "explore ways to promote retirement security."
James Regalbuto, deputy superintendent for life insurance for New York, volunteered to participate and said there has been great innovation in retirement income products, but sometimes there is a disconnect between the design of products and the consumers for which they are intended.
No Savings At All
Jason Berkowitz, chief legal and regulatory affairs officer for the Insured Retirement Institute, identified two critical problems that are leaving too many Americans unprepared for retirement.
For starters, 40–50% of American workers have no retirement savings at all. Secondly, most of
those who do have some savings do not have enough saved, Berkowitz told the A Committee in New York. And they do not have a plan for how they will convert their savings to income in a way that will ensure that they will not run out of money at an advanced age.
These deficiencies mean the vast majority of Americans will have to rely on Social Security, pensions, and full or part-time work to fund their retirement.
IRI research shows that almost half of boomers believe they’ll need retirement income of less than $35,000 a year in today’s dollars, but Bureau of Labor Statistics data shows average spending of $46,000 a year between ages 65 and 74.
“We believe this can be attributed, at least in part, to a lack of understanding about how much it costs to live in retirement,” Berkowitz added.
Berkowitz outlined several IRI research findings that working with a financial professional and owning an annuity are strong predictors of retirement readiness and confidence:
- Boomers with financial advisors and those who own annuities are two to three times more likely to believe they did an effective job planning and that their income will last throughout retirement.
- Seven in 10 boomers with advisors and six in 10 annuity owners feel either “excited and confident” or “happy and cautiously optimistic” about retirement.
- And boomers with advisors are three times as likely, and annuity owners more than twice as likely, as those who don’t have advisors or own annuities to believe they will be more secure in retirement than the average American.
The working group does not yet have any meetings or calls planned.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.
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