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| February 6, 2015 Compliance & Regulation |
National Association for Fixed Annuities |
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| | State & Federal Updates Round Up of State Legislative and Regulatory Activity NAFA tracks state legislative and regulatory activity, as well as the state-by-state adoption of amendments to NAIC model regulations affecting fixed annuities, including the effective dates and any deviations from the standard NAIC language. UPDATE: NEW NAIC ANNUITY BUYER'S GUIDE NOW AVAILABLE FOR FREE DOWNLOAD ON NAIC WEBSITE As a follow up to the NAFA Alert that was issued on November 26, 2014, NAFA is happy to report the following good news. You will recall the NAIC adopted an updated Annuity Buyer's Guide in 2013, following up on the adoption in 2011 of the revised NAIC Annuity Disclosure Model Law-in fact, the NAIC adopted three versions of the Buyer's Guide for Deferred Annuities: Fixed and Variable, Fixed Only, and Variable Only. Originally, the NAIC was asking carriers to pay for licensing fees for use of the Guide(s), along with a fee to download a printed version from the NAIC store. NAFA worked closely with Jim Mumford, Deputy Commissioner for the Iowa Insurance Division and a member of the NAIC Annuity Disclosure Working Group, to help persuade the NAIC to make an electronic version of the Guides available to both the industry and consumers, without restrictions or fees. In December we learned that the NAIC had agreed to this request and were going to work on the logistics of putting it in place. We have now learned that free PDFs of all versions of the Buyer's Guide are available for download at the NAIC Store for Consumer Publications and can be found here: http://www.naic.org/prod_serv_consumer.htm Currently, nine states have adopted the 2013 Annuity Buyer's Guide: Alabama*, Colorado*, Georgia, Iowa*, New Jersey, Ohio*, Oklahoma, Rhode Island*, and Utah. In addition, Idaho permits insurers and producers to use either the old (1999) version of the Guide or the new 2013 Guide for Deferred Annuities - Fixed. Also, the Maine Bureau of Insurance is currently considering adoption of the new Guide, along with the updated disclosure rule. *These states have also adopted the 2011 NAIC Annuity Disclosure Model Regulation. KANSAS: Announcement of New Insurance Commissioner Ken Selzer, CPA sworn in as 25th Kansas Insurance Commissioner TOPEKA, KS - Ken Selzer, a former insurance industry executive and Certified Public Accountant, took the oath of office today as the 25th elected official to lead the Kansas Insurance Department (KID). Commissioner Selzer, a Republican from Leawood, KS, succeeds Sandy Praeger, who retired from office. He was elected in November 2014 for a four-year term as the Kansas insurance regulator. View the entire news release HERE. Summary of Federal Legislative and Regulatory Activity The first month of the new 114th Congress passed calmly with calls for bipartisanship in the House and Senate to solve many pending policy issues. However, the release of the President's budget earlier this week and the corresponding negative response from Republican leaders, reveal the simmering tensions that are likely to escalate as policy making moves forward. NAFA is closely monitoring tax reform efforts to make sure there are no harmful impacts to the retirement and annuity market. The new chairmen of the tax writing committees in the House and Senate will release discussion drafts for reform in the near future. Unfortunately, the President's proposed budget contained recommendations that would result in increased taxes on retirement products and limit retirement savings. NAFA signed a joint statement from the Secure Family Coalition (View the Statement HERE) addressing our concerns. On a positive note, NAFA recently met with the Department of Treasury to discuss allowing fixed indexed annuities to be treated as qualified longevity annuity contracts (QLAC). NAFA strongly believes that FIA's provide the guarantees, predictability and lifetime income options that Treasury seeks. The meeting was positive and we remain optimistic about our ongoing discussions with Treasury. NAFA Publications January Monday Media Reports January 29, 2015 - View January 19, 2015 - View January 12, 2015 - View January 5, 2015 - View * If your company has any questions or concerns regarding state legislative or regulatory actions and would like NAFA to research them for you, PLEASE CONTACT US at SCOTT@NAFA.COM or PMH@HEINRICH-LAW.COM |
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| | SAVE THE DATES! 2015 Upcoming NAFA Conferences NAFA Annuity Leadership Forum: June 17-19, 2015 Hyatt Regency on Capitol Hill- Washington, DC Save the Date to Your Calendar! NAFA Annuity Distribution Summit: October 14-16, 2015 The Biltmore Hotel- Coral Gables, FL Save the Date to Your Calendar! NAFA/Industry Comments, Responses, Publications and Alerts Fixed Indexed Annuities Celebrate 20 Years February 1, 2015 by Jack Marrion NAFA Annuity Outlook The fixed (equity) indexed annuity (FIA) was introduced 20 years ago. Why then? One big reason is that the psychology of the times was right. 1994 had been a rocky year - bond fund returns were poor, the S&P 500 ended the year on a down note, and many stock funds and variable annuities had marginal or negative returns. In addition, the 8% and 9% yields consumers realized on traditional fixed annuities during the previous decade appeared to be over. From a historic point of view, interest rates were on a long downward slope, and insurers were looking for an annuity that could continue to deliver respectable returns. They picked a good one. Over the last 20 years, FIAs have been a part of the longest and strongest bull market in U.S. history, as well as witness to two of the worst bear markets since the Great Depression. Through it all, indexed annuities have done exactly what they were designed to do - provide the potential for a little more interest than a stated-rate annuity would pay while still protecting premium and credit interest from market risk. Here are a few highlights from that history of protection and potential. View the entire article and highlights HERE. MASSACHUSETTS: NAFA Submits a Comment Letter Regarding the Massachusetts Division of Insurance's Intention to Adopt Amendments to 211 CMR 96.00, Consumer Protection in Annuity Transactions NAFA,the National Association for Fixed Annuities appreciates the opportunity to provide written comments to support the Massachusetts Division of Insurance's proposal to amend its Consumer Protection in Annuity Transactions rule, 211 CMR 96.00. NAFA is a national trade association dedicated exclusively to promoting the awareness and understanding of fixed annuities and educating regulators, legislators, consumers, members of the media, industry personnel, and distributors about fixed annuities and their benefits to retirees and those planning retirement. NAPA's membership represent s over 85% of licensed insurance agents and registered representatives selling fixed annuities. NAFA has partnered with a number of trade groups and industry members to promote greater consumer financial literacy and is a strong proponent of efforts to support appropriate sales practices in annuity transactions. Putting measures in place to provide for an even more reliable sales environment built on mutual trust and quality service is absolutely in the best interests of the financial services marketplace and consumers looking for retirement solutions. View the entire comment HERE. Hatch on President's Fiscal Year 2016 Budget February 2, 2015 WASHINGTON -Senate Finance Committee Chairman Orrin Hatch (R-Utah) today issued the following statement in response to the President's Fiscal Year (FY) 2016 Budget that was submitted to Congress: "The President's budget is a retread of the same top-down redistributive policies that have failed to lift hard-working American families and promote a strong and healthy economy. A $4 trillion government spending spree propped up by massive new take hikes, this budget blueprint shamelessly panders to the Democratic base and does nothing to put our nation back on a sound fiscal footing. Rather than creating a simpler, fairer, more competitive tax system it adds complexity and confusion. It lacks fiscal responsibility, not ever reaching a balance, and does nothing to reform the greatest drivers of our debt - Medicare, Medicaid, and Social Security. This budget is partisan, not practical. Even the White House has conceded it will be a nonstarter with Congress. It's time for the President to move past political talking points and start working with Republicans and Democrats to find consensus on policies that will expand the economy, create more jobs and provide bigger paychecks and better opportunities for the American people." Chairman Ryan Responds to President's Budget Proposal February 2, 2015 WASHINGTON - Today, Ways and Means Committee Chairman Paul Ryan (R-WI) issued the following statement in response to President Obama's Fiscal Year 2016 budget proposal. "For six years the president has pursued higher taxes and higher spending, and our economy has paid the price. This budget is simply more of the same. The American people are working harder than ever to get ahead, and this administration wants to put up yet another roadblock: $2.1 trillion in new taxes. And despite this massive tax hike, the President's budget never balances, adding $8.5 trillion in more debt. This is simply unacceptable. "I want to work with this administration, and I hope that we can find common ground. But the President has to demonstrate that he's interested in governing, not just posturing. Tackling big policy challenges-like expanding American exports and reforming our tax code-requires not just hard work, but also an appreciation that our economy grows best from the bottom up with empowered individuals, rather than top down through government. We're going to be focused on an optimistic agenda to move America forward, and I hope the president is willing to rethink his tax-and-spend approach so we can get things done for the American people." Longevity Annuities: Their Time Has Come New rules open a landscape of possibilities for retirees to draw income in their 80s and beyond Illustration by Francesco Bongiorni At a recent Retirement Income Industry Association conference, I asked an insurance industry executive whether longevity annuities have gotten more popular.
"Deferred annuities are doing great!" She paused. "But the only people buying longevity annuities are actuaries, engineers and college professors."
Unfortunately, these are not the people who are actually selling the annuities or putting them in 401(k) plans. But they are the types that you might want to avoid making eye contact with at a party lest you end up getting stuck talking about stochastic mortality risk.
If one of them did manage to corner you, they would explain that retirees in a defined contribution world won't have a pension to pay them income until they die. They'll have to decide how much to pull out of their retirement plans each year to cover living expenses in retirement. This means either counting pennies to avoid running out of money, or accepting the possibility that they may have to live off Social Security if they beat the longevity odds.
The other option is for retirees to just pool their assets together to fund late-life spending. The ones that die early drop out of the pool. They lose the money they invested, but they're dead so they shouldn't really care (although their heirs might). The ones who live the longest start drawing income from the pool later in life, say at age 85, and get the income as long as they live.
This is the efficient way to deal with the so-called idiosyncratic risk of longevity that every retiree faces. It's also one of the biggest flaws in the current defined contribution (DC) system. Most retirees today don't annuitize any of their 401(k) assets, which means they implicitly accept the risk that they're going to outlive their savings. If the purpose of spending nearly $200 billion of foregone taxes each year on 401(k)s and IRAs is to enhance later-life financial security, then we should care a lot about whether retirees are at risk if they live too long. Continue the Article HERE.
NAFA Has Revised Its Sample Disclosure & Acknowledgement Form
This allows for annuity sales by insurance-only licensed agents to now include a non-waiver of rights statement for the annuity owner. - View HERE Where in the Annuity World is NAFA?!?! View Updated NAFA calendar with upcoming speaking engagements, webcasts and conferences. Sign-Up for a FREE Subscription to NAFA's Annuity Outlook Magazine -Here |
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| | PREMIER PARTNERS, IT IS TIME TO RENEW! A 5% Fee Will Be Assessed to Dues Received After March, 1, 2015 NAFA thanks you for supporting fixed annuities and our association throughout 2014. 2015 is going to be a critical year in our industry and your NAFA membership needs to be renewed so that NAFA can stay engaged in the many issues taking place all around us. The Fiduciary Standard, Source of Funds, Permitted Activities, changes to Taxation, and much more pose a threat to our members and consumers. Renew today to help us make sure that fixed annuities remain available for all in their current form! -Click Here to renew online today. NAFA Benefits for Premier Partners! We are excited to announce a new way for you to benefit from your support of NAFA. You now have the opportunity to be the exclusive Insurance Marketing Organization (IMO) in each issue of NAFA Annuity Outlook magazine. Not only does this provide you with a unique and cost effective opportunity for relationship building, it also provides you with an additional way to support NAFA and its initiatives. NAFA receives a portion of all advertising dollars generated from the magazine. NAFA Magazine Digital Marketing Pack Introductory Offer for Members Only |
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| About Us |
| | NAFA, the National Association for Fixed Annuities, is exclusively dedicated to promoting the awareness and understanding of fixed income and deferred annuities through the education of policymakers, journalists, consumers, and the industry about the benefits of fixed annuities. Learn more here. NAFAwire is currently published once each month to update members on important issues in the industry. 1155 F Street NW Suite 1050 Washington, District of Columbia 20004 |
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