In Business Wire’s article “Putnam CEO Reynolds Calls for 2010 to Be the Year of Retirement Reform, with a ‘New Generation’ of Workplace Savings Plans,” Reynolds ideas for the future of retirement plans is highlighted. Robert L. Reynolds is the President and CEO of Putnam Investments. He hopes that following 2009’s year of healthcare reform, 2010 will be the year for retirement reform. Annuities and other similar products that have lifetime guaranteed income should be incorporated into this “new generation” of retirement plans.
By 2020, Reynolds thinks that the market for annuities and other assured income products could reach $5.5 trillion. The current estimate for variable and fixed annuity products by the Insured Retirement Institute is $1.7 trillion so this would be a significant increase over the next decade. His proposed reforms call for insurance and mutual fund companies, sponsors of retirement plans, advisers, and the government to work together creating a new retirement marketplace.
In order to ensure that Reynolds’ idea of making assured income products like annuities a large part of retirement plans, he calls for some government reforms to help the process along. A national insurance charter would consistently regulate all assured income products and a new regulatory agency tentatively named LISA (Lifetime Income Security Agency) would approve all assured income offerings. A national insurance pool funded by the industry to secure annuity funds would be developed to mimic the FDIC bank protection. Reynolds would also like it to be mandatory for workplace plans to offer annuities and other assured products and offer government tax incentives for plan participants to choose these offerings. It’s a tall order, but could drastically change the face of retirement for the next generation.