From: Cindy Rehmeier [mailto:cindyr@mosers.org] 

Sent: Thursday, April 29, 2010 5:13 PM 

To: EBSA, E-ORI - EBSA 

Subject: RIN 1210-AB33

Initial Questions from DOL:

 The advantages and disadvantages of distributing benefits as a lifetime stream of 

income both for workers and employers, and why lump-sum distributions are 

chosen more often than a lifetime income option. 

 The type of information participants need to make informed decisions in selecting 

the form of retirement income. 

 Disclosure of participants' retirement income in the form of account balances as 

well as in lifetime payment streams. 

 Developments in the marketplace that relate to annuities and other lifetime 

income options. 

Response:

 

Annuity products can provide employees a guaranteed defined income stream throughout 

retirement alleviating excessive spending of retirement savings. 

These products have been unpopular in the past because of their complexity, higher fees, 

little disclosure and typical forfeiture should the annuitant experience an untimely death. 

For these reasons, more employees are driven to lump-sum distributions or installments, 

whether the retirement savings is their entire source or strictly supplemental. More often 

than not, participants have not saved enough for retirement and annuitizing a smaller 

balance is not beneficial. When annuity options are offered within a defined contribution 

plan, it is typically “all or nothing” and that is not necessarily ideal for everyone as 

employee circumstances (i.e. income needs and access to additional retirement income 

sources) may vary. 

Annuitization of retirement savings should not be forced upon employees. 

Efforts should instead be placed on enhanced communication to employees on the 

benefits of annuitizing all or at least a part of their retirement savings. This regular and 

informative communication should provide employees projected income streams 

throughout retirement based on various levels of savings, survivor options, and a 

thorough explanation of the fees associated with these products. Easier access to these 

figures can aid employees in making an informed decision about their ability to retire. In 

order to do a proper analysis, employees should also have access to user-friendly tools 

and calculators that can help them perform a retirement needs analysis (determine living 

expenses, healthcare costs, etc.), consider inflation, and incorporate all sources of 

retirement income (guaranteed income from social security and possibly a defined benefit 

plan in addition to defined contribution assets) to determine whether the employee falls 

short or is on target. 
Finally, there have been number of new retirement income solutions introduced over the 

past couple years and these “hybrid” type products are finding their way into the defined 

contribution line-up. Options include some insurance company wrapped products 

offering a guaranteed minimum income benefit where the retiree receives a payment 

regardless of market conditions or a guaranteed minimum withdrawal benefit that offers 

downside protection and a guaranteed percent payout. The products also offer features 

like flexibility, liquidity and the opportunity to pass on any remaining account balance at 

the participant’s death. 

 

 

Cindy R. Rehmeier, CFP®

Manager of Deferred Compensation (State of Missouri Deferred Compensation Plan)

Missouri State Employees Retirement System (MOSERS)

cindyr@mosers.org

 

 

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