WASHINGTON, D.C. – December 17, 2013 –
The Insured Retirement Institute (IRI) today released its state of the industry report identifying opportunities ahead in 2014. While interest rates remain historically low, IRI sees macroeconomic headwinds easing after rates bounced in 2013. As a result, annuity sales stabilized during the past year, and with continued product innovation and ongoing consumer demand, the industry is poised to grow in 2014.
“Annuity providers are financially strong and are well-positioned to capitalize on opportunities in the marketplace,” said Cathy Weatherford, IRI President and CEO. “Furthermore, IRI’s survey of financial professionals shows that 44 percent of advisors anticipate growing their annuity business in the months ahead, while half expect to maintain their current level of business. The ‘four percent rule’ is now receiving scrutiny. As advisors and clients look for new drawdown strategies, only insured retirement products can provide retirement income that is guaranteed to last throughout one’s lifetime.”
A key for the industry’s growth in 2014 will be its ability to continue innovating its product offerings to meet consumer needs. The industry has had recent success with the advent of deferred income annuities. Sales of these products, which totaled $1 billion a year ago, are expected to exceed $2 billion in 2013. Other new products that are beginning to take hold in the market include “growth-oriented” variable annuities – variable annuities that do not offer living benefits but typically have lower fees and more investments options – as well as structured variable annuities, which have caps and buffers to provide upside growth potential with downside protection.
On the public policy front, the industry’s perennial concern of protecting tax deferral continues. Both chambers of Congress studied tax reform in 2013, but momentum has stalled. The industry will remain watchful as reducing or eliminating tax deferral would be harmful to both retirement savings and the value proposition of insured retirement strategies. The industry also is closely watching the Department of Labor, which is expected to re-propose a rule that would change the circumstances under which a provider of investment advice is considered a fiduciary under the Employee Retirement Income Security Act (ERISA). IRI anticipates the proposal to be released in August 2014. An earlier version of the proposal was withdrawn in 2011. The industry’s view was that it would lead to increased costs and complexities, limit consumer choice, and deprive middle-income Americans of access to affordable retirement plan services and information.
to access the entire report.