The American Council of Life Insurers (ACLI) issued the following statement today in support of “The Retirement Plan Simplification and Enhancement Act of 2012,” legislation that, among other things, would encourage the use of annuities in workplace retirement plans:

Washington, D.C. (February 16, 2012) — The American Council of Life Insurers (ACLI) applauds Rep. Richard Neal (D-MA) for introducing “The Retirement Plan Simplification and Enhancement Act of 2012” (H.R. 4050), which includes provisions that encourage employers to offer annuities, the only financial product that can guarantee a lifetime stream of income.

H.R. 4050 provides further evidence of the growing recognition among policymakers on the need to clarify and simplify rules associated with guaranteed lifetime income options in Americans’ retirement security plans. Earlier this month, the Treasury Department proposed guidance that will make it easier for workers participating in employer-sponsored retirement plans to use a portion of their savings to acquire a “deeply deferred annuity” that offers guaranteed income for life. A deeply deferred annuity is designed to start paying workers 10 or 20 years after they have retired. Under “The Retirement Plan Simplification and Enhancement Act,” guaranteed lifetime income options would be more accessible and insurers would be better positioned to help administer annuity rules under the Employee Retirement Income Security Act.

These proposals come at a crucial time for Americans working to secure their retirements. Defined benefit plans, which provide a steady income, are in decline. More and more workers are relying on 401(k) or similar plans as their source for future retirement income. While these plans do a good job of building retirement savings, annuities can convert savings into a guaranteed lifetime stream of income.

“The Retirement Plan Simplification and Enhancement Act” will help Americans achieve the financial and retirement security they want and need. We urge Congress to adopt this important legislation.

"The Retirement Plan Simplification and Enhancement Act" is available here.