The SECURE Act Passed Congress on December 20, 2019

A recent piece of retirement legislation is poised to unlock major opportunities for annuity sellers. The SECURE Act, which President Trump signed into law on December 20, relaxes restrictions on employers’ ability to offer annuities as investment options within retirement plans.

Both for firms that sell annuities and consumers seeking alternatives to traditional retirement investment options, this new legislation might mean welcome change. Since the bill’s passage, firms have added new pages, press releases and resources to public and advisor sites to educate consumers about the annuity implications of the SECURE Act. So far, the industry’s response doubles down on the trend of positioning annuities as retirement income, as firms seek to capitalize on the SECURE Act’s promise of new markets for annuities through employer-sponsored retirement plans.

A safe harbor provision in the SECURE Act, which shifts the onus for determining the suitability of investment options in retirement plans from employers to insurance companies, opens the door for employers to offer annuities within sponsored retirement plans. Annuity issuers hoping to take advantage of this opportunity have already begun adding resources to their public, account owner and advisor sites to educate consumers. These resources perform a range of functions, from explaining the basics of annuities’ use as retirement income to detailing the specific ways that the bill will change regulations on annuities.

From prospects to advisors to employers, firms want to educate as many interested parties as possible about the SECURE Act’s implications. Recently, Lincoln and MassMutual added resources to their public sites focusing on education and raising awareness. Lincoln’s new article congratulates Congress on passing the SECURE Act and praises the bill’s allowing employers to offer lifetime income benefit options to their employees. Meanwhile, MassMutual added two articles to its public site. One encourages prospects to learn about annuities, linking to a short article about how to evaluate whether an annuity makes sense as part of one’s retirement strategy. The other article, directed toward employers, explains new avenues by which plan sponsors may offer annuity investments within retirement plans.

Fidelity and Jackson went beyond publishing educational articles, adding FAQs to their public or account owner sites aimed at answering consumers’ most pressing questions about the SECURE Act. Fidelity’s FAQ page breaks down the most important impacts of the law in expandable sections, noting, for example, that the Act’s raising of the RMD age to 72 affects qualified deferred and fixed annuity owners. Jackson’s FAQ flyer, which the firm featured prominently on the account owner site homepage, covers a range of questions about topics from RMDs and contributions to Stretch IRAs. These public and account owner site articles, pages and resources reflect the range of audiences firms seek to target with new educational materials about the SECURE Act, as well as the goal of positioning annuities as retirement income.

In addition to new public and client site resources, firms have added resources to their advisor sites focused on the implications of the SECURE Act for financial professionals who service annuity accounts. New articles on the Athene and Prudential advisor sites alert advisors to consequences the SECURE Act may have for their businesses. The Athene article notifies advisors about the implications of the bill’s passage for annuity sellers, including raising the RMDs age to 72, while the Prudential article outlines key provisions of the bill and explains their consequences for advisors regarding annuities, retirement and estate planning.

An additional aspect of the new bill with significant implications for annuity sellers is the lifetime income disclosure rule. This provision of the SECURE Act would require employers to include a notice on each employee’s annual benefits statement breaking down how much each employee would earn in monthly lifetime income if they were to annuitize their retirement savings. The Secretary of Labor must still release a model of what the disclosure will look like within the next year, but no matter what, this provision dictates that all annual benefits statements will include some information about annuities. The inclusion of the phrase “lifetime income” in the bill is notable, since this term is popular among annuity sellers as an alternative to “annuity,” reflecting an industry-wide shift toward describing the product by another name. Given that the rule essentially mandates free annuity ads on every year’s benefits statement—not to mention the timbre of articles congratulating Congress on the passage of the Act—it is safe to say that the lifetime income disclosure rule constitutes a win for annuity issuers.

The SECURE Act is the most significant retirement legislation in over a decade, and all industries that deal with retirement will be affected. For the annuity industry, the Act presents a host of new opportunities to position and sell annuities as lifetime income in retirement, likely intensifying a trend in annuity marketing that was already visible before the SECURE Act. In order to make the most of these opportunities, annuity sellers are already attempting to educate prospects, policyholders and advisors about the value of annuities as investments for retirement in light of the SECURE Act. Understanding the effect of this transformative new law will be necessary to navigate the changed landscape of the annuity industry.

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