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401k Annuities Included in Suggested Reform

As the heads of financial services companies press Congress for reforms dealing with retirement savings, they are making changes in their product offerings to account for new government support.  This information comes from Matt Ackermann’s article “Retirement-Product Moves Accompany Reform Drive” in Bond Buyer.  The changes they seek would ensure that consumers’ savings would last them throughout their retirement.  Robert L. Reynolds is the president and CEO of Putnam Investments.  He says that the goal of this reform could be met with more 401k annuities, or using some of one’s 401k savings to purchase an annuity with guaranteed lifetime income.  His goal is to help people better manage their retirement plans after they have been successful in saving over the years and growing their retirement plan.

Changes made over the past three years have already benefited consumers, most notably the Pension Protection Act of 2006 which required employers to offer enrollment in 401k plans to all employees.  Reynolds hopes that 2010 will be a year for retirement reform, especially for annuities.  “Annuities need to become more transparent, less complicated and less costly to become part of the long-term solution.”  With a little help from the government, and positive changes from financial companies, Reynolds believes that annuity assets will be $5.5 trillion in 2020, increasing from $1.7 trillion this year.  Whether consumers purchase fixed annuities or other annuity products, financial services companies assert that annuities and similar products are the best way to ensure consumers’ money lasts throughout retirement.

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