Annuity Research & Consulting (ARC) today launched a new educational website in anticipation of questions about participant Lifetime Income Illustrations after the release of Q2 2023 recordkeeping statements.
The new educational website, www.RetirementSoon.org, is intended to help plan advisors and plan sponsors explain the default income illustration on participant statements based on the SECURE Safe Harbor. It also provides unbiased information about the “how’s” and “why’s” of Single Premium Immediate Annuities (SPIAs), including Nobel Laureate Bill Sharpe’s positive view of their “utility.”
“Employees planning to retire this year and next may need to consider immediate annuities much more so than the deferred products that are the private industry’s big sellers both inside and outside plans…”
ARC Co-Founder Mark Chamberlain
The site will be free until August 1, 2023, and then cost $30/year per subscriber. In a press release announcing the new e-Guide, ARC noted that as a fee-only RIA, ARC receives no commissions, referral fees or AUM revenue from asset managers, insurance companies or product distributors; the $30 subscription ensures the e-Guide is unbiased.
The press release said the new resource may become especially useful for those plans (and advisors) who have yet to embrace the idea of adding annuities inside a plan (and may never choose to do so). The paywall will not be activated until the end of July 2023 to give advisors and sponsors an opportunity to freely review it as a potential benefit for their participants.
“We think of participant education needs in terms of triage; employees planning to retire this year and next may need to consider immediate annuities much more so than the deferred products that are the private industry’s big sellers both inside and outside plans,” said ARC Co-Founder Mark Chamberlain. “This may become especially useful for trustees that have yet to include an annuity option but are using the illustration safe harbor—a SPIA calculation—and want to provide retirement income education for employees retiring this year and next. That said, the information may also be useful to those planning ahead.”
ARC Co-Founder Michelle Richter-Gordon anticipates there will be questions about participant lifetime income illustrations after the release of second-quarter recordkeeping statements.
“For plans relying on SECURE’s Safe Harbor provision, the illustration is modeled on SPIA payout rates; our e-Guide explains the meaning of these illustrations, discusses how SPIAs fit into Nobel Laureate Bill Sharpe’s book on retirement planning for individuals, and suggests key questions consumers should ask about the different product features available, which can vary between issuers,” Richter-Gordon said.
The website includes links to multi-carrier SPIA platforms where participants can model current SPIA cash flows with different options online and ask questions of licensed agents either at the platform companies or independently of them through plan advisors. It is intended to be educational only.
There’s also a relatable true story featuring why one couple added an annuity to their systematic withdrawal strategy after the 2008 Global Financial Crisis to secure lifetime funding for their beloved condo, which ties into Bill Sharpe’s belief that an annuity can improve happiness (or economic “utility”). “This is our understanding of why the Employee Benefits Security Administration Board chose an annuity calculation as the safe harbor”, Chamberlain added. “The regulators and academics have long been aligned on annuities improving utility for middle class retirees; Bill’s thought leadership has historically been the bedrock of prudent portfolio process, making his most current thinking important for the industry to also acknowledge.”
“In second-quarter 2022 we had many plan advisor calls asking for guidance on how to explain these illustrations,” said Richter-Gordon. “Without access to unconflicted information, middle class Americans who choose to leave their employer’s plan at retirement may end up with higher-cost annuities or investment advisory solutions that exclude protected income entirely.”
Recordkeepers and plan advisors can contact ARC about a free trial subscription through the website: www.annuityresearch.com, or via mail to ARC, 60 Riverside Blvd., #307, New York, NY 10069.
SEE ALSO:
• Richter-Gordon, Chamberlain Launch Firm to Vet Lifetime Income Options in 401(k)s
• Financial Engines and Alight Solutions Team to Offer Planning Advice