The American Council of Life Insurers has issued its formal response to a request by the Obama administration for information on the role played by annuities in retirement.
The group said it advocates the institution of guaranteed income in employer-based retirement plans fostered by the federal government and requested that a "limited tax incentive" be applied to annuities to help encourage their use.
According to ACLI President and CEO Frank Keating, "People don't have pensions anymore; and with the 401(k), with the defined contribution system we have today, we have to make these decisions for ourselves. Annuities are an essential part of that retirement planning portfolio."
He added that the group does not believe mandating the use of fixed annuity, but that companies should be encouraged to offer them.
The U.S. Department of Labor and the Treasury filed a joint request earlier this year asking for input on annuities in retirement plans. The agencies focused on the pros and cons of distributing benefits as a lifetime stream of income; why lump sum distributions are chose more often than lifetime income option; and the type of information participants need to make informed decisions.