IRI URGES DOL TO RECOGNIZE ANNUITIES AS IMPORTANT CATEGORY OF RETIREMENT INCOME TOOLS

WASHINGTON, D.C. – The Insured Retirement Institute (IRI) expressed general support for a proposed rule issued by the U.S. Department of Labor (DOL) to clarify fiduciary duties for retirement plan investment selection but urged DOL to enhance the proposal by more clearly and expressly recognizing annuities as an important category of retirement income tools.

In comments submitted to DOL, IRI said that such a clarification would “support the broader objective of helping defined contribution plans address not only the accumulation of retirement savings, but also the adequacy and sustainability of retirement income.”

“The ultimate goal for retirement savings is income that cannot be outlived,” said Emily Micale, Director, Federal Regulatory Affairs, IRI. “With defined contribution plans now the primary retirement vehicle for workers, fiduciaries should have clear guidance that supports prudent consideration of annuities and other lifetime income solutions designed to help retirees achieve a financially secure and dignified retirement.”

The organization strongly supported the proposal’s “asset-neutral” approach. IRI said fiduciaries should be able to evaluate investment products based on participant needs and retirement outcomes rather than regulatory preferences for particular product structures or investment categories.

According to IRI, an asset-neutral approach is especially important for annuities and other lifetime income products.

“These products may differ from traditional accumulation-only investments in purpose, structure, pricing, liquidity, benchmarking, and participant value. A final rule that appropriately recognizes those differences would advance an important retirement security objective without compromising ERISA’s core fiduciary standards,” IRI wrote.

IRI urged DOL to clarify that annuities and other lifetime income products may be considered as designated investment alternatives, components designated investment alternatives, or part of default retirement plan pathways such as target-date strategies and other qualified default investment alternatives (QDIA).

The association also urged DOL to ensure that fiduciaries evaluating lifetime income products may appropriately consider factors such as guaranteed income, longevity protection, income stability and retirement outcomes, rather than relying solely on traditional accumulation-focused measures like expense ratios, short-term investment performance, or liquidity features.

IRI made several recommendations to ensure the final rule provides retirement plan fiduciaries with a clear, flexible, and durable process for evaluating and defending all appropriate lifetime income products on their merits.

IRI concluded its comments expressing support for the proposal’s overarching goal of establishing a clearer, process-based fiduciary safe harbor for selecting designated investment alternatives in participant-directed defined contribution plans.

“With targeted clarifications and refinements, the final rule can meaningfully improve fiduciary confidence, reduce litigation-driven barriers to innovation, and help plan fiduciaries evaluate products that support both retirement savings and protected retirement income,” IRI wrote.

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Contact: Dan Zielinski