The Treasury Department just released a proposed set of regulations that could have a meaningful impact on the retirement income market in the U.S.

The Treasury’s guidance package builds on feedback received in response to the request for comments issued by the Labor and Treasury Departments last fall.

The proposed regulations appear to be squarely focused on longevity risk.  The basis for this concern—particularly as it pertains to the middle class—is summarized in the following chart:

Wired magazine recently reported on longevity-related research that involves the successful application of technology to cellular senescence.

Cellular senescence is a term that describes the aging and overall breakdown of cells.

The problem with the aging cells is that they do not die and disappear from the body.  Scientists believe that the old, broken-down cells stick around and contribute to the degeneration of healthy cells in a body and ultimately to age-related diseases such as cancer.

Geneticists at Stanford University recently published the results of an experiment demonstrating that acquired traits can be passed along to offspring.

Scientists had previously rejected the notion that offspring could inherit characteristics that a parent organism developed during their lifetime.

The Stanford scientists demonstrate that an organism’s behavior and environment are factors that do influence the genes it passes along to offspring.

Defined benefit pension plans are the traditional and increasingly rare type of pension plans offered through employers.

In contrast to defined contribution pension plans such as the 401(k), participants in defined benefit (“DB”) plans receive contractually guaranteed income and assume none of the risks (investment risk, interest rate risk, longevity risk, etc) associated with producing that lifetime income stream.

The problem is that defined benefit plans are scarce, and many of those that do still exist are in tough shape.

A very interesting article from Financial Times columnist David Stevenson suggests that investors are making the very common mistake of missing sight of the forest for the trees. 

In this case, the trees are the daily ups and downs of the stock market.  Market volatility naturally draws many people into a sort of short-term obsession with undulating asset prices and portfolio values. 

A recent research report from Swiss Re suggests that life expectancy increases over the past several decades have been consistently underestimated. 

The report, titled “A window into the future: Understanding and predicting longevity,” examines the traditional methods of forecasting life expectancy—both of which are largely based on historical trends. 

There is an interesting blog that appears to be affiliated with the British pension consulting firm Redington.  

The “Red Blog” offers pension-related content from a group of authors who are both formally and informally associated with Redington. 

Not surprisingly, longevity trends and longevity risk are prominent topics on the Red Blog. 

The design of the blog and the visual representation of dry and fairly abstract topics are unique. 

A recent paper sponsored by the Society of actuaries provides an impressive and comprehensive review of retirement income-related research. 

The paper, titled Research and Reality – A Literature Review on Drawing Down Retirement Financial Savings, can be accessed by clicking here. 

As discussed in a recent post, ultra low interest rates are an enormous burden for retirees.  Low interest rates make it difficult to produce reasonable levels of yield and increase the present value of future liabilities (retirement spending is a liability).

It is challenging to think of another sector of the U.S. economy that has the same puzzling mix of characteristics as the annuity industry.  Consider, for example, some of the following contradictory features: