On January 7, the House Education and the Workforce’s Subcommittee on Health, Employment, Labor and Pensions held a hearing on the role of lifetime income strategies, including annuities, on retirement savings in the current environment of rapidly-decreasing traditional pension plans.

The hearing highlighted that the decline of traditional pension plans has shifted a great deal of the risk and responsibility for saving for retirement to individuals, and that some 2/3 of all Americans are worried about whether they could outlive their retirement savings. Research shows, hearing witnesses said, that some 45 percent of all households will run short of money in retirement.

Subcommittee members, on a bipartisan basis, expressed support for expanding access to annuities and other guaranteed lifetime income strategies, although there was also concern expressed about lifetime products’ complexity and costs. In particular, most of the subcommittee’s Democrats and full Committee Ranking Member Scott (D-VA) called for strong consumer protections to accompany any enhancements to the rules that incentivize annuities. They also questioned whether current law provides adequate fiduciary rules and expressed concern about rules that would allow risky investments in retirement plans.

Prospects: It is unlikely, but not impossible, that Congress will act on lifetime income issues this year. Key staff, on a bipartisan basis, from the four committees with jurisdiction over retirement issues are working on the next generation retirement savings bill (SECURE 3.0), but they do not expect to have a proposal ready for review/action until later this year at the soonest. So, lifetime income issues are likely to emerge soon, but action on them is not expected this year.

NAIFA Staff Contacts: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org