Compulsory Annuitization

Members of Congress and officials from the Departments of Treasury and Labor are working on options that would provide sources of guaranteed lifetime income to participants in 401k and other pension plans. At a high level, it is clear that the Obama Administration wants to create structures and incentives for: Increasing retirement savings. Providing people with the ability to turn those accumulated savings into streams of income that last through retirement. A trial program that would involve...

The head of an Australian financial service firm's life operations, Richard Howes, is an advocate of compulsory annuitization . Howes believes that 30 percent of retirement funding should be compulsorily assigned to guaranteed income streams--in other words to annuities. Howes also suggests that the relatively slow take-up of annuities in the Australian market is a result of investors who have been conditioned by a uninterrupted 20 year bull market in equities. Howes spells-out the case for...