1

Department of Labor and Department of the Treasury 

May 3, 2010 

Office of Regulations and Interpretations 

Employee Benefits Security Administration 

Room N-5665 

U.S. Department of Labor 

200 Constitution Avenue, NW. 

Washington, DC 20210 

Attention: Lifetime Income RFI 

Re: RIN 1210 – AB33 

Request for Information Regarding Lifetime Income Options for Participants and 

Beneficiaries in Retirement Plans 

The following comments are submitted by Kelli H. Hueler on behalf of Hueler Companies. The 

comments offered are based solely on data, research, and market intelligence compiled by Hueler 

Companies during the development and implementation of Income Solutions®; an independent 

institutional annuity program. 

Until very recently, the focus of defined contribution plans, their investment options, and 

participant education has been on saving and investing for retirement. Prior to the market 

correction in 2008, converting savings into lifetime income prior to or during retirement received 

very little attention from plan fiduciaries and many professional service firms. 

We believe that giving participants access to institutionally delivered alternatives for converting 

retirement savings into lifetime income is vital. Providing participants a cost effective means to 

“pensionize” their hard-earned savings into a “paycheck for life” is necessary in order to 

meaningfully improve income sufficiency for millions of American retirees. Without such 

capabilities being widely accessible to defined contribution plans, the defined contribution 

system has severe limits in terms of serving the public interest and meeting the retirement needs 

of an aging population. The defined contribution system has evolved substantially and now 

serves as the backbone for retirement savings for millions of working Americans. To ensure the 

system continues to evolve for the good of all workers and retirees, it is necessary to build the 

third leg of the stool. 

I want to thank both the Department of Labor and the Department of the Treasury for helping 

promote serious thought and encouraging problem solving around the issue of lifetime income 

creation for defined contribution plan participants. Industry statistics show that plan participants 

rarely select annuitization options out of their defined contribution plans and a majority of plan 

sponsors report that participants rarely ask for annuities. While this may be factual information, 

it does not offer any insight as to why there is such a low take up rate for annuities among 

participants and why plan sponsors have largely eliminated the option from their plans. Our 

hope is that this Request for Information process will help to peel back the layers of complicated 

barriers and look to make practical change. 

10400 Viking Drive, Suite 190 

Eden Prairie, MN 55344 

Phone: (952) 941-5351 

Fax: (952) 941-5744 

Stable Value Market Data 

www.hueler.com

Annuity Purchase Platform 

www.incomesolutions.com

 HUELER 

COMPANIES 
2

When discussing global competition and future innovations Thomas Friedman recently said “the 

most important competition going forward here is between you and your own imagination”1. 

When it comes to improving lifetime income sufficiency for defined contribution participants, 

we would submit that the only thing standing between failure and enduring success is a 

collective vision. Your interest as expressed by requesting industry input starts us down the path 

of collaborative possibility and opens the door to creating a practical framework for achieving 

successful change. 

Sincerely, 

Kelli H. Hueler 

President & CEO 

Hueler Companies 

Enclosures: 

Hueler Companies Response to DoL RFI 

Kelli H. Hueler Biography 

 
3

Department of Labor and Department of the Treasury 

Hueler Companies Response to Request for Information Regarding Lifetime Income 

Options for Participants and Beneficiaries in Retirement Plans 

Re: RIN 1210 – AB33 

Introductory Background

Hueler Companies was founded in 1987 as an independent consulting firm assisting plan 

fiduciaries and trustees with research, product selection, and ongoing oversight of their stable 

value investment funds. Our hallmark has been independent research, analytical reporting, and 

continued efforts to improve transparency through standardized reporting. Today Hueler 

Companies acts as an independent source of industry data, market research, analytical reporting, 

and related services to all major market segments. The Hueler Analytics Pooled Fund Universe 

tracks approximately 85% of professionally managed stable value pooled funds. The Universe 

constitutes approximately $100 billion in assets representing close to 30,000 retirement plans. 

In 2000, Hueler Companies pioneered the development of a web-based platform that facilitates 

efficient, transparent, low cost delivery of lifetime income annuity options to transitioning 

employees. The broader mission of this effort was to create a platform that transformed annuity 

delivery to plan participants by applying an institutional framework, eliminating the inherent 

conflicts of interest, and allowing for open affordable access to all plan sponsors. After several 

years of research and development directly with plan sponsors and annuity providers, Hueler 

launched the Income Solutions® annuity program in 2004. In July of 2005, Hueler provided 

testimony before the ERISA Advisory Council Working Group on Retirement Plan Distribution 

Options. 

To date over 1,000 plans have adopted the Income Solutions® program in order to extend access 

to lifetime income alternatives to their participants nearing, at, or in retirement. It is important to 

note that, while the program was designed to facilitate implementation as either an in-plan option 

or a voluntary IRA rollover, 98% of plans choose the voluntary IRA rollover distribution 

alternative. We will comment further on survey data gathered around why this is the case. 

Adoption is generally facilitated through large plan administrators, as integration with the 

existing benefits portal is optimal (three of the top six plan administrators and six of the top 17 

plan administrator firms are currently providing access to the program). Based on new adoptions 

scheduled for 2010 these numbers will continue to show meaningful growth. Access to this 

alternative currently covers thousands of plans and millions of participants. Monitoring activity 

and analyzing actual results, both positive and negative, offers the opportunity to better 

understand what does and does not work, identify continued roadblocks, and develop solutions 

for improved utilization. 

Our experience throughout the last decade in working with a variety of plan administrators, plan 

sponsors, and participants shapes our answers to several of the questions put forth. Our 

comments focus on those questions that Hueler can best address by offering insight from direct 

experience or the empirical data that we have compiled. If the agencies have additional 

questions based on the data Hueler provides, we would be happy to offer additional input. It is 
4

also worth noting that Hueler does not manufacture any form of investment or insurance 

products, so we are neutral to the actual structure. However, our interest and experience is with 

those products that provide guaranteed lifetime income, lend themselves to transparent 

comparison, and can be selected based on competitive results. 

Retirement risks and the benefits of lifetime income payments

The primary advantage to participants receiving some portion of their retirement savings in the 

form of lifetime income payments is to create a supplemental “paycheck for life” 

(http://www.myretirementpaycheck.org/) that can guarantee a baseline level of income for 

retirement. This increases the likelihood that retirees will not outlive their assets and allows 

them to transfer some of the serious financial risks they face in retirement to a qualified third 

party. Ultimately, participants receiving lifetime income payments from converted retirement 

savings will help promote better financial outcomes and enhance the quality of life for millions 

of Americans by providing a reliable level of certainty to their financial future. 

Specifically, the following risks can be addressed: 

 

a) Longevity risk: It is a well-established fact that people are living longer than the 

previous generation and this could significantly increase the number of years an 

individual lives in retirement. Increased life expectancy is a wonderful, albeit 

expensive gift with new risks both known and unknown. Establishing a baseline 

income level, preferably one that adjusts either partially or fully for inflation, guards 

against the risk of outliving one’s retirement savings and increases likelihood of 

income sufficiency. 

b) Investment risk: After the market correction that began in 2008, investors were 

stunned by the market losses they suffered. Many participants saw their retirement 

savings fall dramatically. For those participants who did not need to begin drawing 

down their savings as a needed supplement to their retirement income, the situation 

was less dire because they will have a chance to dollar cost average more savings into 

the market and recover over time. For those participants who needed to begin 

drawing down their balance to supplement income or had already begun drawing 

down their savings, the effect will have lasting and yet undetermined affects [Note: in 

the first quarter of 2009 quote and purchase volume through the platform increased 

by four times from the first quarter of 2008]. 

Through a random simulation of returns, the following charts help show dramatically 

different outcomes for the same drawdown strategy and risk profile. The graphs 

below illustrate the vastly different portfolio outcomes given the sequence of returns 

and the timing of when they occur during the drawdown phase. 

The difference in outcome is based on when the timing of a given return sequence 

occurs during the draw down phase. 

Chart 1 and 2 demonstrate how an individual portfolio experiencing positive returns 

early in the drawdown phase could stay at the same value or increase over time. You 

can see in charts 3 and 4, how negative returns early in the drawdown phase can have 
5

devastating effects. These two scenarios could leave a retiree with only a subsistence 

income level due to a severely reduced asset base or possibly devoid of any remaining 

financial resources long before their average life expectancy. 

Assumptions: 

Lump Sum: $100,000 Withdrawal: $4,000 Return: 4% 

Savage, Sam. “An Annuity Example.” The Flaw of Averages. 8 October 2000. Web. 27 April 

2010 <http://analycorp.com/SJM-animations/>5

c) Inflation risk: Erosion of buying power over time seems to resonate with most 

participants at or in retirement. In fact, it is one of the justifiable deterrents to and 

concerns often expressed about buying a fixed annuity that does not adjust for 

inflation. Unfortunately, the conventional wisdom espoused by many investment 

1 2

3 4
6

professionals has been that if you invest in equities (increase your risk profile) over 

time your returns will outpace inflation. The 4% drawdown method has been 

promoted vigorously for years by the financial planning and retail brokerage 

community. Participants/retirees have been led to believe that this is sustainable and 

that such risk taking will likely mean their investments will keep pace with inflation. 

An excellent reference on this subject is work by Professor Zvi Bodie, Professor of 

Finance and Economics at Boston University School of Management (zvibodie.com). 

It is in the best interest of participants to promote a plainspoken practical approach to 

participant education on the topic of inflation-protected annuitization 

(http://zvibodie.com/webcasts). 2

The current monthly income amount for a $100,000 Single Life Only 65 Year Old 

Male for an inflation-adjusted annuity is $485.07 or $5,820 for the first year. 3 

The traditional 4% drawdown method on a $100,000 would result in $4,000 per year. 

Assuming a constant amount of $4,000 per year in comparison to the inflation 

adjusted annuity at an assumed 2% annual rate of inflation, the difference in income 

payments over 20 years is substantial. 

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

4% Drawdown

Inflation Adjusted Annuity Quote Assuming 2% Inflation Rate*

Copyright© Hueler Investment Services, Inc. 2010 

All Rights Reserved. Income Solutions®

Year

Impact of Inflation Adjusted Annuity vs. 4% Drawdown Over 20 Years 
7

Consider the basic pros and cons for each option: 

4% Drawdown on $100,000 = $4,000 per year 

• Market Risk (Potential Loss of Principal) 

• Longevity Risk 

• Inflation Adjustments Unknown

• Potential for Market Gains 

• Potential for Remaining Assets Available for Heirs

Inflation Protected $100,000 Single Life Only Annuity = $5,820 3 first year and 

annual minimum lifetime payment 

• Above Risks are Eliminated 

• 46% Increase in Initial Monthly Income 

• Annual Inflation Adjusted Income Increase 

• No Remaining Assets Available for Heirs 

• Provider risk 

d) The drawbacks to standard fixed lifetime income annuities can be summarized as: 

1) lack of liquidity/flexibility, 2) provider risk, 3) no market upside, and 4) no assets left 

for heirs. Unbundled straightforward annuity products have inherent liquidity limits 

given the primary objective of transferring longevity risk to the provider in return for 

income payments that last a lifetime. Greater liquidity and flexibility can be provided at 

a price, but, depending on the provisions elected, the income stream could be reduced by 

a measurable amount. When converting assets into income, it is most cost effective for 

individuals to pay only for the provisions they need or risks they want to transfer. 

Variable annuity structures seek to combine lifetime income payments with investment 

objectives such as liquidity, flexibility, and asset growth. The objective is to allow an 

individual to accomplish multiple goals in a bundled approach. While the benefit is a 

streamlined process for accomplishing multiple financial objectives in one vehicle, the 

potential drawbacks are complexity and cost. 

 

Participant behavior and lack of take up rates for annuity or lifetime income arrangements

There is a fair amount of behavioral research that points to why people would choose lump sums 

over a stream of monthly payments (desire for control, a chance to buy their dream, belief that 

they can do a better job managing the money, issues of trust, fear of the unknown, etc..). We 

refer to the obvious lump sum payment preference as the “lottery affect.” Bottom line; 

participants are put in a very similar position as a lottery winner. In most cases, they are offered 

a check for more money than they have ever seen or hoped to have at their disposal in their 

lifetime. They are faced with the decision of taking the lump sum, having control over their 

money, and living their dreams, or letting someone else decide how much of “their own” money 

they will be allowed to have each month. 
8

Adding to the “lottery affect”, the annuity being offered typically comes in the form of an all or 

nothing proposition. Hueler has surveyed groups of participants and professionals from varying 

walks of life in forums across the country and the results are consistent. When we describe the 

choice of receiving a lump sum check with which the individual can then make decisions as they 

see fit in the time frame that makes sense for their lives vs. transferring the entire balance of their 

life savings to a single source in return for monthly payments for the rest of their life, typically 

only 1-2 % of the group responds affirmatively. Depending on the audience, the responses may 

be as low as zero or as high as 5%. At a minimum, plans should be strongly encouraged to 

allow for partial distributions. 

Interestingly, when you change the proposition and give the audience a more flexible set of 

options (outlined below) the results radically improve. At least 1/3 of the group typically 

answers affirmatively and in some cases up to 2/3rds can be expected to do so: 

 

Flexible Proposition

1) The option to decide how much money to set aside for lifetime income 

payments using only a portion of their savings and leaving the balance in 

their plan 

2) Individuals decide when to begin receiving payments 

3) Competitive low cost quotes not available after you leave the plan 

4) Multiple insurance companies to choose from 

4) Quotes are customized to reflect personal income needs

5) Inflation protection is an option 

 6) Indviduals can buy from more than one company 

 7) No obligation to purchase 

Additionally there is also the natural inclination to take the “path of least resistance.” The lump 

sum payout is infinitely easier to choose for the reasons outlined above as well as the spousal 

notification requirements that come along with in-plan annuity distribution options. Amazingly, 

such notifications are not required when a spouse chooses to liquidate their entire retirement 

account balance, which is money that could then easily be diverted or spent in a manner that has 

no benefit to the spouse. An annuity purchase is instead recorded based on premium paid and 

the annual income is reported by the provider for tax purposes. This is one of those examples of 

the “law of unintended consequences” where a rule put in place to guard against abuse may in 

fact be disadvantaging the very group it was originally designed to protect. The fact that spousal 

notification rules exist on annuity benefits and not on lump sum withdrawals at a minimum 

creates an uneven playing field and worse encourages people to take the easy route, which 

unfortunately is a lump sum withdrawal. 

Finally, it is difficult to measure the impact of absence. Participant education has been virtually 

devoid of references to lifetime income for several decades. In most cases, the communication 

and education provided has focused on the benefits of saving more, taking investment risk, 

having a long-term horizon, dollar cost averaging, and to some extent, preserving principal. 

Taking steps to appropriately “pensionize” retirement savings is largely a foreign concept for 

baby boomers, yet they are now facing critical decisions about securing income for life. The 

decisions made at this juncture could have substantial impact on an individual’s ability to sustain 

themselves financially for the duration of their lives. Unless changes are made to put lifetime 
9

income or annuitization on par with other investment decisions and presented as an important 

and beneficial consideration, nothing will change. 

Participant behavior is inextricably linked to Plan Sponsor behavior

EBRI’s 2010 confidence survey4 shows that participants place a higher degree of confidence in 

private employers than other large institutions particularly the Federal Government. However, 

the vast majority of sponsors are reluctant to offer education about or access to lifetime income 

or annuity products due to the perception of liability. With the decline of pension plans and the 

inherent limits of Social Security, the burden of responsibility for income sufficiency in 

retirement is rapidly shifting to individuals, yet their most trusted source is hamstrung and unable 

to participate in essential education. 

The conundrum is that plan participants will not get comfortable with lifetime income or annuity 

options until plan sponsors are free to do a better job of educating, communicating, encouraging 

consideration of, and providing access to low cost competitive solutions. Information about 

lifetime income alternatives needs to be fully integrated into the normal flow of 401(k) 

investment communication and prominently displayed in the distribution process. It is 

imperative that individuals are encouraged to consider cost effectively “pensionizing” a portion 

of their retirement savings when they are still affiliated with their employer-sponsored plan. 

Data compiled by Hueler shows a direct correlation between sponsor communication efforts and 

increased site activity. This typically holds true for both annuity quote activity and purchase 

activity. When a plan sponsor communicates specific information about the benefits of the 

annuity program, activity typically increases for a period of up to two to three months following 

the specific outreach. Consistent quarterly communication will boost awareness and consistently 

increase activity. Without practical clear guidance, however, the vast majority of plan sponsors 

will not be willing to offer important communication and education about lifetime income 

alternatives. 

 

This issue has become very polarizing for sponsors, consultants, and product providers. In many 

cases, ERISA counsel recommends against providing any type of distribution option even when 

the sponsor is inclined to do so. In some cases, we have seen counsel rebuke consultants for 

recommending that the plan sponsor client even consider providing access to lifetime income on 

a voluntary basis. 

Based on results compiled from surveying organizations currently using the program and 

discussions with plan administrators, plan sponsors, consultants, and ERISA attorneys, we know 

that the primary concerns about offering an annuity arrangement (even outside the plan as an 

IRA rollover) are: “potential fiduciary liability” and the “appearance of endorsement”. A good 

indicator of these concerns is the fact that 98% of plans who adopt the program choose to 

implement it as an IRA rollover or voluntary distribution alternative rather than an in-plan option 

even though the program can accommodate either. The second most commonly cited concern is 

related to fiduciary liability but separately articulated as issuer selection. Our survey results 

show that for over 90% of plan sponsors there are three key reasons for adoption of the program: 
10

1) it is an IRA rollover alternative rather than an in-plan option, 2) the qualified third party 

objective issuer selection process, and 3) the competitive multi-issuer format. 

It is important to mention that even when a plan administrator or plan sponsor has chosen to 

offer access to the program they are often required to create a disclaimer page that participants 

must acknowledge before requesting quotes to avoid the perception of “endorsing” the program. 

When this is the case, we see more than a 50% drop off rate after participants see that their 

employer does not endorse the program. The disclaimer may as well be a large “Danger 

Proceed with Caution” sign. 

Institutional vs. retail results for types of lifetime income arrangements available that allow 

for plan accumulations to be rolled over 

There are many types of investment and annuity products designed to provide income that can be 

purchased either through an IRA rollover or directly from an IRA. If these products are 

purchased after a participant leaves the plan they would typically be retail arrangements and do 

not offer the same benefits provided by institutionally designed products. Commission based 

planners and captive agents offer products that encourage assets to flow out of low cost 

employee sponsored retirement plans into higher commissioned products. High costs will have a 

substantial negative impact on the value of an individual’s retirement savings and will 

conversely limit the total income available over a 20-30 year period. 

The illustration below shows the approximate benefits an individual may expect to receive when 

institutional pricing and competitive quoting are combined. No time value of money was 

factored into the differentials shown on the graph so it is a conservative depiction. 

$0

$3,000

$6,000

$9,000

$12,000

$15,000

$18,000

$21,000

$24,000

$27,000

$30,000

10 Years 20 Years 30 Years

Copyright© Hueler Investment Services, Inc. 2010 

All Rights Reserved. Income Solutions®

Institutional Payment Differential

 

For example, a $200,000 single life only annuity for a 65 

year old male resulted in a monthly payment of $1,311 when 

purchasing an annuity through the Income Solutions® 

program versus $1,232 a month when buying a traditional 

retail annuity. This example is a difference of 6.4% or a $79 

increase in your monthly income. Over a 10 year period this 

differential equates to $9,500, over 20 years it is 

approximately $18,900 and over 30 years the difference 

grows to $28,400. Depending on the type of annuity and data 

provided, monthly income amounts for competitively bid, 

institutionally priced annuities are typically higher than the 

monthly income amount provided by retail priced annuities.

(This data is based on Hueler's independent research from February 2010. Actual pricing 

will be dependent on each individual's quote information, market conditions and sponsoring 

organization. While institutional pricing is typically more competitive than retail pricing, 

this may not always be the case.)

In addition to the above data, Hueler recently conducted a 12 week analysis of institutional 

annuity quotes versus five possible annuity retail offerings for a $100,000 annuity. The results 

showed on a consistent basis that institutional quotes produced higher monthly income amounts 

than those available in the retail annuity market. When comparing institutional quotes to five 
11

retail sources on over 400 individual annuity quote scenarios, the average difference showed a 

6.37% advantage over the retail sources. It is important to note that the maximum difference was 

in the double digits (approximately 15%) from a single provider retail offering. Over time, these 

differentials significantly impact the guaranteed income individuals receive. 

When lifetime income and annuity products are provided through employers, they should be 

delivered on an institutional framework. This includes institutional pricing, the benefit of due 

diligence for issuer selection, fee transparency, objectivity, unbiased education, competition 

whenever possible. Pricing data shows the variability of insurance company pricing can create 

substantial differentials between issuer quotes. This data speaks volumes about the potential 

impact on lifetime income results for individual participants. 

Institutional or group pricing is only part of the equation. Without competition, individual 

participants could have vastly different outcomes relative to how competitive the lifetime income 

amount being offered is at the time they decide to retire. Competition ensures each participant 

will be able to access the best possible market pricing and maximize their income amount for 

life. 

The two charts below illustrate the variability of one individual insurance carrier’s pricing across 

random quote scenarios. 

This first graph illustrates the carrier’s quote activity for one specific annuity type over a 12 

month period. Each line represents the range of the high to low annuity quote for each scenario. 

The box represents the same individual insurance carrier across each quote scenario. 

500 

525 

550 

575 

600 

625 

650 

675 

700 

725 

750 

Quoted Monthly Income

Sampling of Institutional Annuity Quotes ($100,000 Deposit, One Annuity Type)

Quote Range versus Issuer Quotes 

12 Month Period

Copyright© Hueler Investment Services, Inc. 2010 

All Rights Reserved. Income Solutions®
12

The second graph expands the data from above to include a broader sample of annuity data 

containing multiple annuity types. The box represents the same individual insurance carrier used 

above and again shows the price variability of a single insurance carrier against a peer universe 

of competitors. 

500 

525 

550 

575 

600 

625 

650 

675 

700 

725 

750 

Quoted Monthly Income

Sampling of Institutional Annuity Quotes($100,000 Deposit, Multiple Annuity Types) 

Quote Range versus Issuer Quotes 

12 Month Period

Copyright© Hueler Investment Services, Inc. 2010 

All Rights Reserved. Income Solutions®

How to encourage plan sponsors to offer lifetime income or annuity arrangement to their 

participants

 

We believe that a safe harbor for issuer selection that reflects legitimate fiduciary responsibility, 

but takes into account an increasingly complex industry landscape is necessary. The recent 

meltdown of the financial markets, the fact that some of the most prominent financial and 

insurance institutions fell prey to unanticipated consequences, and the failure of the public rating 

agencies to render credible ratings decisions before or after the crisis, leaves few plan sponsors 

willing to take on the fiduciary liability associated with issuer selection. Plan sponsors who are 

willing to utilize outside expertise either directly or through a qualified third party should be 

encouraged to utilize independent due diligence to meet their fiduciary obligation. As an 

example, Hueler augments their internal research and expertise with independent research from 

ALIRT, an organization that specializes in insurance company analysis 

(http://www.alirtresearch.com). Costs associated with independent insurance company analysis 

and due diligence for the purpose of performing or assisting with issuer selection should be 

considered a legitimate plan expense, as it directly benefits participants. 

The role of technology in organizing efficient delivery of basic lifetime income benefits, 

reducing overall costs to the system, and facilitating default options

Technology is essential for creating an efficient delivery framework for basic annuitization on a 

cost effective basis. Plan sponsors cannot individually afford to manage competitive bidding 

programs or develop and maintain internal operations sufficient to facilitate efficient delivery of 

lifetime income annuity arrangements. Acceptable automated platforms that are easily accessible 

to plan sponsors can ensure: 
13

1) Competition 

2) Organized product comparability 

3) Fee transparency 

4) Objectivity (no pay to play provider conflicts) 

5) Best case pricing (low cost delivery) 

6) Flexibility (staged annuitization and issuer diversification) 

7) Reporting oversight 

This type of platform can also provide simple on-line tools that allow people to determine if they 

have an “income gap” and what they need to set aside to cover that gap. These tools help 

provide answers to questions about how much a participant should annuitize and how much 

income they need to cover baseline expenses. The Income Gap calculator and the Income 

Calculator at Hueler’s web-site are two of the most frequently visited pages. We estimate that 

95% of the visits to the site include use of these tools. Additionally, the program encourages 

participants to begin thinking about pensionizing a portion of their account balance years before 

they need to make a firm decision. Over 50% of all quote activity is driven by participants 

between the ages of 55-65, while 78% of the purchase activity is by participants over the age of 

61. 

Additionally, this type of platform can be easily integrated with professional assistance or 

advisory services for participants. Several plan administrators make service centers available to 

assist participants with questions and offer assistance as they move through the quote and 

purchase process. We believe including objective guidance to participants will improve the take 

up rate of lifetime income arrangements, but first plan sponsors must feel free to provide access 

to and promote consideration of lifetime income arrangements without concern over additional 

liability. 

Default options have the potential to be a positive catalyst for change in bringing lifetime income 

arrangements to plan participants. Given the persistently low take up rates, allowing for a 

qualified default option for annuitization seems prudent. Technology can play a key role in 

facilitating default options. One example to consider is what Hueler refers to as a “diverse 

annuity.” Many fiduciaries and professionals believe diversification is a fundamental step 

towards mitigating provider concentration risk. Many participants express similar concerns. The 

basic concept is that participants should not annuitize 100% of their balance at one time or invest 

100% of their annuity dollars with one provider. 

Using technology, sponsors could offer a fully automated default option that designed to 

facilitate establishment of a pre-determined set of criteria for purchasing individual annuities for 

participants. (i.e. state guarantee fund limits, total dollar amount per contract, or a percentage of 

total premiums) They may also want to consider the recent survey results from EBRI where 

38% of participants favored being required to use $100,000 of their account to purchase lifetime 

income or 50% percent whichever is less4. Once the plan sponsor sets the criteria for 

diversification, the purchase system would automatically process participants as they were 

defaulted. The system would calculate the appropriate premium amount to be used for an 

individual purchase, request a diversified quote across multiple issuers, select the winning quotes 

starting with the highest income amount, present the monthly payment amount to the participant, 

and notify parties of the pending withdrawal. This automated default option attempts to address 
14

common concerns about concentrating participant retirement savings with one provider and 

concerns related to offering a single issuer solution that may produce a less than competitive 

outcome for participants. 

Another example where technology could improve delivery is in facilitating the concept of trial 

annuitization on an automated basis. Trial annuitization may be very appealing to some 

participants due to the desirable liquidity feature, but others may need or want to maximize their 

current income amount, which can best be achieved with a lifetime income quote. By 

automating the process, each participant would always see two quote options. The first quote 

would reflect a trial annuity that offers enhanced liquidity with a lower monthly income amount. 

The second quote would offer a monthly lifetime income quote that provides less liquidity but 

higher monthly income. If the participant did not provide a response, the system would 

automatically default them into the more liquid trial annuity and if competition is available in 

this product type, the system could initiate the same diverse annuity quote process outlined 

above. 
15

Works Cited

1

 Friedman, Thomas. Interview with Joe Scarborough and Mika Brzezinski. 

Morning Joe. NBC, Washington. 21 Apr. 2010. 

http://www.msnbc.msn.com/id/3096434/ns/msnbc_tv#36685382 

2

 Bodie, Zvi. (2009, September 26). Zvi Bodie on the risks facing retirees and how inflationproof annuities can protect them.

Retrieved May 3, 2010 from Zvi Bodie website. 

website: http://zvibodie.com/webcasts

3

 IncomeSolutions.com 

 Retrieved May 3, 2010 from Income Solutions® (U.S. Patent 7,653,560) website. 

 website: http://incomesolutions.com, 

4

 Employee Benefits Research Institute. Ruth Helman, Craig Copeland, and Jack VanDerhei, 

“The 2010 Retirement Confidence Survey: Confidence Stabilizing, But Preparations 

Continue to Erode,” EBRI Issue Brief, no. 340, March 2010. 

<http://www.ebri.org/pdf/briefspdf/EBRI_IB_03-2010_No340_RCS.pdf> 

5

 Savage, Sam. “An Annuity Example.” The Flaw of Averages. 8 October 2000. Web. 27 April 

 2010 <http://analycorp.com/SJM-animations/> 
16

Kelli H. Hueler Biography

Kelli Hueler is CEO and founder of Hueler Companies, an independent data and research firm 

providing reporting and systems designed for the annuity and stable value marketplace. Hueler 

Companies was founded in 1987 and today the firm’s data, market research, and analytical 

reporting are considered the industry standard. 

Under Ms. Hueler’s leadership, the company developed and launched Income Solutions®; a 

ground breaking annuity purchase platform. The platform was designed to empower 

transitioning employees in need of creating a personal lifetime income stream by providing online access to competitively bid, institutionally priced annuities. Today the Income Solutions® 

program is the leading model of its kind for delivery of lifetime income annuities to retirees. The 

program has been adopted by some of the industry’s leading plan administrators and plan 

sponsors. 

Ms. Hueler is nationally recognized as a key contributor on the topic of lifetime income creation. 

She has testified before the DOL ERISA Advisory Council on annuitization at the point of 

retirement, presented at the Wharton Pension Research Council, and was tapped to participate in 

the National Endowment of Financial Education’s think tank on income sufficiency. Ms. Hueler 

presented at the Employee Benefit Research Institutes’ National Forum on retirement income 

sufficiency and at the AARP’s “Divided We Fail” initiative in Washington DC. She is a 

founding member of the DCIIA (Defined Contribution Institutional Investment Association) 

serving on the Retirement Income Committee and also participates on the Society of Actuaries 

Committee on Post-Retirement Needs and Risks. 

Along with being recognized as a forward thinker in the retirement income arena, Ms. Hueler is 

also an industry expert in the field of stable value investments. In 2009 she testified before the 

DOL ERISA Advisory Council regarding Stable Value Funds and Retirement Security in the 

Current Economic Conditions. She has authored and appeared in numerous articles and spoken 

internationally on the topic. Ms. Hueler has appeared on investment programs such as CNN 

News, CBS’ Wall Street Journal Report. She served on the Board of Directors for the Stable 

Value Investment Association (SVIA) for six years and additionally served on the SVIA 

Executive Committee chairing the association’s Communication and Education Committee. 

During Ms. Hueler’s tenure, she has also authored chapters for both “The Handbook of Stable 

Value Investments” by Frank Fabozzi and “Guaranteed Investment Contracts-Risk Analysis and 

Portfolio Strategies-Edition 2” by Kenneth L. Walker. 

Prior to founding Hueler Companies, Ms. Hueler held the role of Registered Representative for 

Kidder Peabody & Company and IDS Life where she was responsible for institutional and retail 

clients. She holds a B.A. from St. Olaf College.