-----Original Message----- 

From: David Pare [mailto:davefairtex@aim.com] 

Sent: Tuesday, February 02, 2010 10:31 PM 

To: EBSA, E-ORI - EBSA 

Subject: RIN 1210-AB33 

Summary: 

1) additional information and options are good 

2) mandated annuities as my only choice for my IRA/401k - bad 

3) if annuities were my only option, I would withdraw my money from my 

current plan 

4) mandated annuities will result in a windfall for wall street - more 

fees, higher expenses, and ultimately less return for retirees. We go 

back to the days of 5% load mutual funds. 

5) if you disagree with #4 - are you kidding me? 

6) annuities should be benchmarked against cash flows expected from no 

load mutual funds assuming same mortality, principal withdrawl, risk 

taken, etc. 

7) hiding risk in annuity does not eliminate the risk. but it will 

hide the (higher) expenses. 

I think providing additional information and options is a fine thing. 

However, I think the tone of all these changes goes beyond providing 

information, and in fact attempts to change the retirement options 

available to investors into annuities under the premise that they are 

somehow safer or more secure. While I like more options and 

information, I strongly disagree with any changes to the current system 

that would mandate annuities as my only option. I like my current set 

of options - adding to them would be great. Reducing my options would 

most definitely not be. 

My guess is, however pure the motives of the people behind this current 

concept, mandating that all retirement accounts be annuities would 

become completely corrupted by Wall Street. 

First, annuity providers have the same issues of expected returns that 

private investors do, and the annuity is only as safe as the carrier 

that provides it and the risks that carrier decides to take. Large 

pension funds often lose money - witness all the pension funds that are 

"underfunded" now. You think perhaps that AIG or Met Life will do 

better than, say, CALPERS at investing my money? I don't think so. 

And in terms of total return to the retiree, the investment expenses of 

an annuity will be higher, simply because we are now layering an entire 

collection of hidden costs (sure to be higher than, say, Vanguard's no 

load low expense mutual fund options) which will in effect provide a 

gold mine for the annuity providers, at the expense of the retirees. 

Annuity fund managers will receive larger salaries and bonuses, and 

with the costs carefully hidden you can be sure the fees will grow and 

grow. Everyone knows about expense ratios because mutual funds are 

transparent. This will absolutely not be the case with annuities. 

Wall Street and finance have a long and storied history of extracting 

maximum value from the "customer", and the more complicated the product 

is, the more they extract. That's just how things work there. 
Annuities are no exception, and things will be worse because there will 

be no transparency. 

[I may sound like I work for a mutual fund company. I do not. I'm 

just an individual - a self employed software engineer, and I value 

choice and competition because I believe they decrease costs and 

increase returns] 

I feel that any description of "lifetime benefits" should include an 

apples-to-apples comparison with, say, the expected cash flows with a 

similar amount invested in existing vehicles, such as an S&P 500 index 

fund and a medium term bond fund, with low expense ratios, with the 

same assumptions of mortality, expected market returns, principal 

withdrawl, and most specifically the amount of risk they are taking. 

If my annuity provider levers up 500% and invests my retirement in pork 

bellies, the risk of catastrophic loss should somehow be a part of the 

disclosure. 

Without information and transparency,investors cannot make an informed 

choice, and annuity providers will skim way too much cream from the 

retirement system. I expect if everything is properly explained, 

annuities will be hard pressed to compete with the low expense options 

that currently exist - and that to compete successfully, they will end 

up taking more risk, and eventually they will blow up - and have to be 

bailed out by my tax dollars. 

Ultimately, this is my money. I earned it. I saved it with the 

understanding I would be able to control the particulars of where that 

money is invested. During the crash I was able to select investments 

that were able to largely preserve my retirement account, unlike most 

of the large pension funds. I believe my money, under my control, is 

more likely to be there for me at retirement because of this. 

I have stopped contributing to my retirement plan because of the 

uncertainty surrounding this issue, and I will absolutely withdraw my 

money if a mandated annuity program were to be my only option. 

Absolutely. Withdraw. My. Money. Penalties and all. 

I know you are trying to do what's right for me, but please remember, 

its not your money, its my money. My. Money. I worked my lifetime to 

save it, and I have earned the right to decide how to best invest it. 

Capitalism is about choice - and sometimes the freedom to fail is a 

part of that choice. Please let me continue to have that freedom. 

Thank you 

Sincerely, 

David Pare