American Council of Life Insurers (ACLI) President and CEO Susan Neely and NAIFA-Vermont President Tyler Wood issued the following joint statement on the best interest annuity rule adopted recently by the Vermont Department of Financial Regulation:
“A new rule adopted by the Vermont Department of Financial Regulation, led by Commissioner Kevin Gaffney, provides stronger protections to consumers seeking lifetime income through annuities. The rule enhances the standards financial professionals must follow and protects consumers' access to, and information about, annuities, the only financial product in the marketplace that can provide guaranteed income for life.
“Vermont becomes the 42nd state to adopt the ‘best interest of consumer enhancements’ in the National Association of Insurance Commissioners (NAIC) Suitability in Annuity Transactions Model Regulation. These new laws and regulations also harmonize with the SEC’s Regulation Best Interest. Nearly 80% of Americans now live in a state with a best interest standard for annuity sales.
“These measures offer a better approach to consumer protection than the proposed fiduciary-only regulation from the U.S. Department of Labor. The proposal is significantly similar to a failed 2016 regulation that, before it was struck down by a federal court, resulted in more than 10 million American workers’ accounts, with $900 billion in savings, losing access to professional financial guidance.
“By comparison, the best interest standard ensures that all savers, particularly financially vulnerable middle-income Americans, can access information about different choices for long-term security in retirement. A recent survey finds that middle-income retirement savers would be very concerned about a regulation keeping them from accessing the professional financial guidance they want and need.
“The U.S. Congress reaffirmed the importance of lifetime income when it passed legislation in 2019 and 2022 that made it easier for employers to include annuities in workplace retirement plans. With these enhanced state and federal consumer protections, millions of savers in Vermont and 41 other states can be confident that financial professionals must act in the consumer’s best interest when offering recommendations about annuities.
“We hope that all states implement these sensible protections so that consumers everywhere can benefit from a best interest standard.”