Draft 

 May 3, 2010 

Submitted via electronic delivery 

Office of Regulations and Interpretations 

Employee Benefits Security Administration 

U.S. Department of Labor 

200 Constitution Avenue, NW 

Washington, DC 20210 

 Attn: RIN 1210-AB33, Lifetime Income RFI 

 Ladies and Gentlemen: 

 SIFMA appreciates the opportunity to provide information to the Department of Labor 

and the U.S. Treasury (“Agencies”) as you consider the advantages and disadvantages of 

facilitating lifetime income options in plan design and encouraging participants to use lifetime 

income options as part of their retirement planning strategies. We believe it is very important for 

the Agencies to take a very deliberative approach in formulating new policies in this arena. The 

Agencies that participated in this RFI have a regulatory mandate. It is not appropriate for a 

government agency to take a position that would “facilitate” lifetime income options in plans. 

Rather, the Agencies should have an agnostic view toward any particular investment product. 

 SIFMA would like to highlight our recommendations and concerns as follows: 

 The Departments of Labor and U.S. Treasury are urged to adopt the following 

recommendations: enhance relevant agency websites to include generic examples of converting 

account balances to annual income. In addition, the Department should make available a 

brochure discussing the questions employers and participants should ask when considering a 

lifetime income option to promote awareness of the role lifetime income may play in retirement. 

 SIFMA does not support proposals to require plan sponsors to offer any particular 

investment option nor would we support the option of defaulting participants into annuity or 

lifetime income guarantee options. Finally, SIFMA believes requiring disclosure of an 

“annuitized amount” will result in new costs to retool systems with little, if any benefit to plan 

participants. Other alternative approaches would serve the educational purpose of such a 

requirement at a much lower cost and likely with less potential of misleading participants. 

 

1. From the standpoint of plan participants, what are the advantages and disadvantages 

for participants of receiving some or all of their benefits in the form of lifetime payments? 

 
 As participants retire, they must consider how best to manage the sources of income that 

will be available to them in retirement. This includes Social Security, any personal savings, any 

additional savings or eligibility to receive a benefit from a qualified plan, real estate equity, and 

continued income from part-time work. The risks faced by retirees include longevity risk, 

inflation risk, and investment risk. Lifetime income options are by no means the only tool that 

can help manage these risks. 

 While many participants are concerned that their savings will not “last” throughout their 

life, participants have shown a strong preference to maintain control over their own finances, 

particularly at retirement age. Indeed, a number of studies have shown that participants prefer to 

take their retirement distributions and roll them into an Individual Retirement Account (IRA). In 

the IRA, participants have flexibility to purchase an Individual Retirement Annuity, establish a 

systematic withdrawal program, and invest their savings in an array of options not typically 

available through their employer’s plan. This preference for flexibility and control does not 

mean that participants avoid annuities and other forms of lifetime income entirely. Research 

conducted by the Investment Company Institute found that 22 percent of the survey group had 

chosen to annuitize all or a portion of their defined contribution account balance.1

 Additionally, 

9 percent of survey respondents indicated that a fixed annuity option was selected as an IRA 

investment later. 

 Finally, SIFMA urges the Department to consider the impact of encouraging lifetime 

income options on retirement adequacy. Research published by the Investment Management 

Association in the United Kingdom analyzed a variety of distribution methods. The research 

found that in many instances, a lifetime income option resulted in lower retirement income than a 

systematic withdrawal strategy. 2

2. Currently the vast majority of individuals who have the option of receiving a lump 

sum distribution or ad hoc periodic payments from their retirement plan or IRA choose to 

do so and do not select a lifetime income option. What explains the low usage rate of 

lifetime income arrangements? Is it the result of a market failure or other factors (e.g., 

cost, complexity of products, adverse selection, poor decision-making by consumers, 

desire for flexibility to respond to unexpected financial needs, counterparty risk of seller 

insolvency, etc.)? Are there steps that the Agencies could or should take to overcome at 

least some of the concerns that keep plan participants from requesting or electing lifetime 

income? 

 Many of the reasons for the low usage of lifetime income options are referenced as part 

of the question. “Poor decision-making” seems to suggest a subjective view by the Department 

 1

 Defined Contribution Plan Distribution Choices At Retirement, page 45. Investment 

Company Institute, Fall 2008. 

2

 Modelling Income Drawdown Strategies, Research Paper, Investment Management 

Association. 

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which neither SIFMA nor the majority of participants share. Some participants do seem to be 

engaging in rational decision-making with respect to their retirement planning; the absence of 

advice from professionals continues to make that decision-making more difficult. Studies 

indicate that women are more likely to annuitize than men. Older age participants are more 

likely to annuitize than younger participants.3 

 To the extent that every participant can roll his or her lump sum into an IRA and select a 

lifetime income provider of his choice, it is difficult to see why government action would be 

required. Indeed, given the strong interest in maintaining flexibility and control, it is not 

apparent that requiring or even encouraging default to a retirement income solution would have 

significant impact on participant choices but may indeed, cause unnecessary concern, as the 

comments received by the Department would appear to indicate. As noted by the Vanguard 

research, in defined benefit plans where the joint and survivor annuity is the default, participants 

actively work to avoid the default form of distribution. 

 The tax benefits of non-qualified annuities may also play a role. It is common for 

investors to use non-qualified assets to purchase an annuity because the tax treatment of the 

distributions is more favorable assuming a long-term investment strategy. Distributions from 

tax-qualified accounts are taxed at ordinary income and the investor may wish to defer paying 

those taxes. 

6. What types of lifetime income or other arrangements designed to provide a stream of 

income after retirement are available to individuals who have already received 

distributions from their plans (out-of-plan options), such as IRA products, and how are 

such arrangements being structured (fixed, inflation adjusted, or other variable, 

immediate or deferred, etc.)? Are there annuity products under which plan 

accumulations can be rolled over to an individual retirement annuity of the same issuer 

to retain the annuity purchase rights that were available under the plan? 

 There are many types of individual retirement annuities available in the market; many 

more than would be available to a particular participant in a particular plan if the employer were 

encouraged or required to select a particular lifetime income option. and impose it on 

participants. The individual annuity market permits the participant to have access to a 

customized solution. 

 We are aware of a handful of insurance providers that offered an IRA rollover option for 

participants who had invested in a lifetime income option through the employer. However, the 

option to rollover the account was not available in every state. SIFMA members also report that 

plan sponsors and participants struggle to gain an understanding of the potential limits on the 

ability to roll over the annuity and the ramifications if they leave a particular employer. Even 

where the option to rollover to an IRA of the same issuer is available, the participant may be at a 

disadvantage. If the participant is younger and has many years to work before retirement and 

 3

 Lump Sum or Annuity? An Analysis of Choice in DB Pension Payouts, page 4, Vol. 30. 

Vanguard Center for Retirement Research, November 2007. 

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can’t afford to make additional contributions, or the amount invested was small, the participant 

may be left with a small benefit at retirement. 

7. What product features have a significant impact on the cost of providing lifetime 

income or other arrangements designed to provide a stream of income after retirement, 

such as features that provide participants with the option of lifetime payments, while 

retaining the flexibility to accelerate distributions if needed? 

 The mortality and expense charges are the most expensive features associated with an 

annuity. However, other features, such as guaranteed return on principle and the year certain 

payment are features that are almost as costly. 

8. What are the advantages and disadvantages for participants of selecting lifetime 

income payments through a plan (in-plan option) as opposed to outside a plan (e.g., after 

a distribution or rollover)? 

 One advantage is that where the plan sponsor provides an annuity option, a fiduciary 

other than the participant presumably does due diligence on the annuity provider. In addition, a 

group contract may offer a lower fee structure than might be available to a participant alone. 

 However, the choice that the employer makes will likely be a fairly generic option that 

may not be as suitable to a particular participant’s situation as he or she might select. In 

addition, without significantly more education, it is likely that some workers may purchase an 

annuity when it may well be inappropriate to do so. The high turnover rate characteristic of 

many workers means that amounts contributed to lifetime income options may be too low to 

provide a meaningful income replacement opportunity and will be difficult to manage given the 

few opportunities to rollover the investment to an IRA. 

9. What are the advantages and disadvantages from the standpoint of the plan sponsor of 

providing an in-plan option for lifetime income as opposed to leaving to participants the 

task of securing a lifetime income vehicle after receiving a plan distribution? 

 A plan sponsor who elects to make a lifetime income option available to the participants 

is assuming additional fiduciary responsibility to select and monitor the insurer. The firm’s 

expense of offering a plan when a lifetime income option is offered is also likely to increase. 

Most 401(k) plan sponsors are interested in limiting their fiduciary responsibility; being required 

to monitor an insurer throughout the life of a participant who selected an annuity option, and the 

added responsibility of dealing with any insurer who becomes insolvent, is a disincentive to plan 

sponsors. 

10. How commonly do plan sponsors offer participants the explicit choice of using a 

portion of their account balances to purchase a lifetime annuity, while leaving the rest in 

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the plan or taking it as a lump sum distribution or a series of ad hoc distributions? Why 

do some plan sponsors make this partial annuity option available while others do not? 

Would expanded offering of such partial annuity options--or particular ways of 

presenting or framing such choices to participants--be desirable and would this likely 

make a difference in whether participants select a lifetime annuity option? 

 If offered, a partial annuity option would likely be generic and would not be as suitable as 

other partial annuity options that would be available outside of the plan. We are aware of some 

insurers who offer a lifetime option on partial account balances, and permit the remaining 

account balance to be converted to a life time option later. Withdrawal options are often 

severely restricted, either carrying a market value adjustment or an installment payout over a 

range of time frames – 5 years or even 10 years. Other options include a non-level payout, a 

10% lump sum with the first monthly payment, a payout deferred until the date minimum 

required payments are required to begin, etc. Even where the option is offered, participants 

seldom select it. Where participants have selected it, many do not understand that the choice will 

lead to restrictions on rollovers and additional fees and adjustments. 

11. Various ``behavioral'' strategies for encouraging greater use of lifetime income have 

been implemented or suggested based on evidence or assumptions concerning common 

participant behavior patterns and motivations. These strategies have included the use of 

default or automatic arrangements (similar to automatic enrollment in 401(k) plans) and 

a focus on other ways in which choices are structured or presented to participants, 

including efforts to mitigate ``all or nothing'' choices by offering lifetime income on a 

partial, gradual, or trial basis and exploring different ways to explain its advantages and 

disadvantages. To what extent are these or other behavioral strategies being used or 

viewed as promising means of encouraging more lifetime income? Can or should the 

401(k) rules, other plan qualification rules, or ERISA rules be modified, or their 

application clarified, to facilitate the use of behavioral strategies in this context? 

 SIFMA does not believe it would be helpful for governmental policymakers to encourage 

lifetime income default distribution strategies in employer plans. Behavioral research with its 

application to retirement plans is still in its infancy. Taking advantage of participant inaction to 

further the goal of increasing retirement savings is one thing; however, using such inertia to force 

a participant into an annuity is something quite different. Most would agree that no harm is done 

when participants are automatically enrolled into a 401(k) plan even if the participant wouldn’t 

have participated absent the default arrangement. Annuitizing all or a portion of a participant’s 

account on the other hand is not always in the best interest of the participant especially if the 

participant already has a significant portion of their retirement assets in annuity form, is in poor 

health, requires liquidity, or is annuitizing in a low-interest rate environment. Formulating 

regulatory or statutory changes without additional research is premature and possibly will cause 

harm to participants. A number of lifetime income options are already available in the market – 

more are being added. Government regulation at this point, before there is an opportunity to 

determine whether the new products serve a perceived need will likely lead to distortions which 

will hinder more innovation in this area. 

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12. How should participants determine what portion (if any) of their account balance to 

annuitize? Should that portion be based on basic or necessary expenses in retirement? 

 Most participants will need the help of an investment professional to determine what 

portion, if any, of their account balance to annuitize. The decision should be based on a holistic 

assessment of the individual’s circumstances which is not something most plan sponsors are able 

to do. For many participants, assets in the defined contribution plan may be just one source of 

income in retirement. Other participants may not have a large enough balance to justify 

annuitizing and it may not be feasible to consolidate other assets with an employer. Many 

participants choose to rollover their assets to the Individual Retirement Account because it 

provides an array of choices and flexibility to evolve as the individual’s needs evolve. Sadly, 

fewer participants will have access to such holistic information and advice due to the guidance 

issued, or about to be issued, by the Department on such topics as the investment advice 

exemption and the investment advice fiduciary definition. 

13. Should some form of lifetime income distribution option be required for defined 

contribution plans (in addition to money purchase pension plans)? If so, should that 

option be the default distribution option, and should it apply to the entire account 

balance? To what extent would such a requirement encourage or discourage plan 

sponsorship? 

 We do not support requiring any form of lifetime income distribution option, nor do we 

support requiring lifetime income options to be used as a default option with respect to some or 

all of the account. Current regulation on plan sponsors already creates a disincentive to establish 

and maintain plans. Additional requirements which add to the responsibilities of the plan 

sponsor and increase the potential for fiduciary liability will only exacerbate this situation. 

14. What are the impediments to plan sponsors' including lifetime income options in their 

plans, e.g., 401(k) or other qualification rules, other federal or state laws, cost, potential 

liability, concern about counterparty risk, complexity of products, lack of participant 

demand? 

 Generally, plan sponsors are concerned about potential liability. The Department’s 

pronouncements on the “safest available annuity”, lack of participant demand and a reduction in 

the perceived size of the benefit due to the cost of the lifetime income option, especially where it 

is tailored to provide even minimal flexibility. Where an accumulation is only a few thousand 

dollars, the amount of the monthly payment is unattractively low. 

16. Are there differences across demographic groups (for example men vs. women) that 

should be considered and reflected in any retirement security program? Can adjustments 

for any differences be made within existing statutory authority? 

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 There are significant differences across demographic groups that need to be considered. 

These differences are some of reason why a one choice fits all solution in a particular retirement 

plan makes little sense. Employers will also have employee populations that are diverse, making 

it very difficult for them to offer a lifetime income option that would meet the needs of their 

workforce. 

Participant Education 

17. What information (e.g., fees, risks, etc.) do plan participants need to make informed 

decisions regarding whether to select lifetime income or other arrangements designed to 

provide a stream of income after retirement? When and how (i.e., in what form) should it 

be provided? What information currently is provided to a participant, who typically 

provides it, and when and how is it provided to them? 

 We think it is critical that participants understand how to realistically assess their 

retirement income needs. This would include information on available investments, economic 

factors, fee information, risk tolerance, the need to consider health factors, and access to other 

sources of income. If the participant determines that a guaranteed product may be suitable, the 

participant must also consider insurance company solvency risk; risks attendant to so-called 

“guaranteed funds” and whether the guarantees are real, unconditional, or subject to elimination 

due to factors outside a participant’s control. However, disclosure material we are aware of is 

inconsistent. The plan sponsor or other administrator would be at a disadvantage in analyzing 

the information, digesting it, and then presenting it to participants in a manner that is 

understandable and relevant to the individual participant and would likely object to the additional 

fiduciary duty of synthesizing some other financial institution’s disclosure. 

 Of course, presenting information on lifetime income options should be done in a holistic 

way. Plan sponsors may provide access to educational resources but these resources are 

typically limited to information about investment options available under the plan. Very few 

plan sponsors offer retirement counseling to participants that incorporates the range of issues that 

should be considered as part of retirement planning. 

 Section 514 of ERISA may make it difficult for the Federal Government to require 

insurers to provide this information but there appears to be no protection for plan sponsors who 

offer a lifetime income option but do not provide the information that participants need to assess 

the “safety” of the advertised guarantee. The fiduciary performing due diligence will likely 

encounter difficulty in accessing and understanding the information. Participants acting alone 

will experience even greater difficulties. 

 The ability to consult an advisor would be of significant help to plan sponsors, 

participants and those with IRAs. Unfortunately, fewer advisers will be able to discuss these 

issues at a reasonable cost. This is likely one of the major reasons that many participants prefer 

to take a lump sum distribution from the plan and roll the assets to an IRA where they will have 

access to more robust counseling and potentially advice on how to invest and preserve their 

various sources of income. 

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18. Is there a need for guidance, regulatory or otherwise, regarding the extent to which 

plan assets can be used to pay for providing information to help participants make 

informed decisions regarding whether to select lifetime income or other arrangements 

designed to provide a stream of income after retirement, either via an in-plan or out-of 

plan option? 

 No. The guidance provided by the Department of Labor is satisfactory. Plan assets can 

be used to provide information on plan distribution options and plan assets surely can be used for 

education on plan options as the Department has made clear in IB 96-1. We do not believe it 

would be appropriate under existing guidance for the plan to pay for advice or education on out 

of plan retirement income options, like reverse mortgages, with plan assets. Larger plan 

sponsors may provide robust education and counseling for employees nearing retirement but 

these types of program are not paid for with plan assets. However, the DOL should ensure that 

participants are able to receive advice and guidance from an advisor on all of the assets – 

whether in the plan or not – should he or she choose that option. 

19. What specific legal concerns do plan sponsors have about educating participants as 

to the advantages and disadvantages of lifetime income or other arrangements designed 

to provide a stream of income after retirement? What actions, regulatory or otherwise, 

could the Agencies take to address such concerns? 

 The Department has significantly limited the ways in which meaningful investment 

advice can be provided to participants, and indeed, SIFMA intends to request that the 

Department clarify whether advice can be given on manager programs and whether to rollover 

assets to an individual retirement account or individual retirement annuity. 

 Even more concerning to plan sponsors and fiduciaries is Advisory Opinion 2005-23A. 

This opinion has cast grave doubt on whether any person who could be deemed a fiduciary can 

advise a participant on the benefits of a rollover. It appears that while the Department is 

concerned about retirement choices of participants, its own recent rulings and regulations move 

participants away from the kind of advice that is critical to sound retirement planning. 

 

 20. To what extent should plans be encouraged to provide or promote education about 

the advantages and disadvantages of lifetime annuities or similar lifetime income 

products, and what guidance would be helpful to accomplish this? 

 We believe that it would be helpful for the Agencies to use websites to educate plan 

sponsors and participants about the role lifetime income products have in retirement, as well as 

other sources of retirement income. However, we do not believe a plan sponsor should be 

required to provide education to participants, including with respect to any particular aspect of 

retirement planning. There are already significant barriers to plan sponsorship. Requiring plans 

to pay for education will not be helpful; indeed, participants would say that the education, 

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because it must be hypothetical, not individualized, and may not contain recommendations for 

the particular individual, is also not helpful. Moreover, to the extent that the education makes 

the plan sponsor a fiduciary for the participant’s investment choices or distribution choices, it 

will be a further disincentive to the establishment or maintenance of plans. 

Disclosing the Income Stream That Can Be Provided From an Account Balance 

 21. Should an individual benefit statement present the participant's accrued benefits as a 

lifetime income stream of payments in addition to presenting the benefits as an account 

balance? 

 We believe that the cost of this type of disclosure requirement significantly outweighs 

any potential benefit. This provision will have the unfortunate consequence of forcing service 

providers who already have started providing a monthly or annual withdrawal amount on the 

benefit statement to retool their systems at additional cost, as well as the ongoing cost of 

providing individualized information which relies on another set of actuarial calculations. We 

are also concerned this type of requirement will confuse participants should they believe that a 

monthly lifetime payment is available to them since it is “disclosed” on their statement. Finally, 

if a plan sponsor offered some type of guaranteed withdrawal product, how would the plan 

sponsor conform the disclosure for that investment option with the assumptions that would 

ultimately have to be approved by the Department? (The above response is intended to address 

the follow up items in Question 22 and 23 as well.) 

 SIFMA notes that the 2008 ERISA Advisory Council Working Group on Decumulation 

recommended that the Department encourage or facilitate this type of disclosure but did not 

endorse this disclosure as a requirement. The Department could be helpful by increasing the 

visibility of its electronic educational resources and potentially, encouraging plan sponsors to 

link to the Department’s website and its wealth of material. We note that the Department 

theoretically already provides access to calculators – including those maintained by AARP and 

other groups. Another alternative to consider would be to provide a table on the Department’s 

website that shows a typical monthly payment for every $10,000 invested in a lifetime income 

product. 

24. Should an individual benefit statement include an income replacement ratio (e.g., the 

percentage of working income an individual would need to maintain his or her preretirement standard of living)? If so, what methodology should be used to establish such 

a ratio, such as pre-retirement and post-retirement inflation assumptions, and what are 

the impediments for plans to present the ratio in a meaningful way to participants on an 

individualized basis? 

 Again, we think a required disclosure of this nature is a concern. There is not widespread 

agreement on the preferred income replacement ratio nor the assumptions that would be used to 

determine the ratio. How does one assume a value for equity in one’s home? Other outside 

assets? Style of living? Health? Age of children? These very questions underscore the need for 

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investment and retirement planning advice for participants on an individualized basis. To the 

extent that the Department makes this advice impossible from the hundreds of thousands of 

financial professionals who are affiliated with financial institutions who also market retirement 

products, it casts real doubt on the Department’s efforts in this area. 

401(k) and Other Plan Qualification Rules 

26. Could or should any changes be made to the rules relating to qualified joint and 

survivor annuities and spousal consents to encourage the use of lifetime income without 

compromising spousal protections? 

 We do not believe that any changes in the consent rules would be helpful, after balancing 

the issues involved. 

28. How do the required minimum distribution rules affect defined contribution plan 

sponsors' and participants' interest in the offering and use of lifetime income? Are there 

changes to those rules that could or should be made to encourage lifetime income without 

prejudice to other important policy objectives? In particular, how are deferred annuities 

that begin at an advanced age (sometimes referred to as longevity insurance) affected by 

these rules? Are there changes to the rules that could or should be considered to 

encourage such arrangements? 

 We think that the minimum distribution rules thwart a participant’s ability to retain 

flexibility for health and income changes in their retirement. SIFMA has long supported 

adjusting the age for required minimum distributions to reflect increased life expectancy rates. 

However, any changes to minimum distribution rules should apply equally to lifetime income 

products and other products. SIFMA would be very concerned about changes to the RMD rules 

that would establish discriminatory treatment. 

29. Are employers that sponsor both defined benefit and defined contribution plans 

allowing participants to use their defined contribution plan lump sum payouts to 

``purchase'' lifetime income from the defined benefit plan? Could or should any actions 

be taken to facilitate such arrangements? Should plans be encouraged to permit retirees 

who previously took lump sums to be given the option of rolling it back to their former 

employer's plan in order to receive annuity or other lifetime benefits? 

 This is a potential policy opportunity the Department should explore. On one hand, it 

would be unwise to facilitate this if the repayment of distributions would cause a plan sponsor to 

suffer additional funding burdens. In the absence of a funding deficit however, it could provide 

new incentives to employers if this was a voluntary option. 

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Selection of Annuity Providers 

31. To what extent could or should the Department of Labor make changes to the safe 

harbor under 29 CFR 2550.404a-4 to increase its usage without compromising important 

participant protections? What are those changes and why should they be made? 

 As the Agencies are aware, the Pension Protection Act directed the agency to revise the 

safe harbor. On October 6, 2008, the Department published final regulations regarding the safe 

harbor for individual account plan annuity providers. The final regulation eliminates many of 

the criteria as well as the requirement that an independent expert be consulted when the plan 

sponsor lacks expertise. We think the Department has addressed this issue. The 2008 Working 

Group also reviewed this issue and agreed that the Department’s revised regulation “substantially 

addressed” their recommendation.4

 

ERISA Section 404(c) 

 

 33. To what extent are fixed deferred lifetime annuities (i.e., incremental or 

accumulating annuity arrangements) or similar lifetime income products currently used 

as investment alternatives under ERISA 404(c) plans? Are they typically used as core 

investment alternatives (alternatives intended to satisfy the broad range of investments 

requirement in 29 CFR 2550.404c-1) or non-core investment alternatives? What are the 

advantages and disadvantages of such products to participants? What information 

typically is disclosed to the participant, in what form, and when? To what extent could or 

should the ERISA 404(c) regulation be amended to encourage use of these products? 

 We do not believe lifetime income options should be required as a core option under 

ERISA 404(c). 

Qualified Default Investment Alternatives 

35. To what extent are plans using default investment alternatives that include 

guarantees or similar lifetime income features ancillary to the investment fund, product 

or model portfolio, such as a target maturity fund product that contains a guarantee of 

minimum lifetime income? What are the most common features currently in use? Are 

there actions, regulatory or otherwise, the Agencies could or should take to encourage 

use of these lifetime income features in connection with qualified default investment 

alternatives? 

 The use of QDIAs with a lifetime income feature is very limited. SIFMA is aware that 

some products contain a floor of a specific amount of income. However, several of these 

products have also been withdrawn from the market. QDIA providers do not describe these 

products as containing a guarantee. The Department specifically chose not to permit annuity 

 4

 ERISA Advisory Council, Report on the Spend Down of Defined Contribution Assets 

At Retirement, 2008. 

- 11 - 
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products with a stable value feature as QDIAs. We assume that at the time, the Department 

balanced equity exposure for younger employees against lifetime income and determined that the 

former was the more important policy concern. 

 In 2008, a working group of the ERISA Advisory Council recommended that the QDIA 

regulation be updated to extend the safe harbor to options that extended into the distribution 

phase. We think these changes are premature at this time. 

Comments Regarding Economic Analysis, Regulatory Flexibility Act, and Paperwork 

Reduction Act

39. For plans that offer lifetime annuities or similar lifetime income products, what 

percentage of eligible workers elect to annuitize at least some of their retirement assets 

and what percentage elect to annuitize all of their assets? 

 As we have noted, the data on this point are very isolated to a few plans and we think it 

would be unhelpful to extrapolate that data to all participants. The Department could add 

questions to the Form 5500 to capture more reliable data on which to base these very critical and 

far-reaching policy decisions. We also believe the Agencies should be careful about relying only 

on data regarding annuitization activity through the plan. As previously cited research 

demonstrates, participants are rolling over to an IRA and in a number of situations, choosing to 

annuitize. In an IRA, the account holder will have access to more options and will also maintain 

flexibility that may be needed over the course of their retirement. 

 * * * * 

 We thank the Agencies for the opportunity to provide comments and we appreciate the 

thoughtfulness of the questions included in the RFI. Please do not hesitate to contact the 

undersigned if you have any questions. 

 Sincerely, 

 Liz Varley 

 Managing Director