What is old is new again. Experts at an ERISA Advisory Council hearing recommended that annuities should be part of a defined contribution plan’s default The council is a 15-member body that advises the Department of Labor (DOL) and they had experts who testified in support of annuities.
Olivia Mitchell, a professor at the Wharton School of the University of Pennsylvania, testified in favor of a specific default annuity structure in defined contribution plans. She recommended that participants default into a product in which approximately 10% of their plan balance at age 65 is used to purchase a deferred annuity that does not begin to pay until they are about 80 or 85 years of age.
Michael Finke, a professor of wealth management at the American College of Financial Services, spoke more generally about the benefits of annuities as default options in Defined Contribution plans.
I understand the issues regarding lifetime income. My issues are the fees associated with annuities, and the burden of plan sponsors. Fully reviewing annuity options for cost.
