On July 21, 2015, NAFA filed its official comment letter with the Department of Labor-Employee Benefits Security Administration in regard to the Department’s Proposed Conflict of Interest Rule (RIN 1210-AB32), the Proposed Best Interest Contract Exemption (ZRIN 1210-ZA25), and the Proposed Amendment to and Proposed Partial Revocation of Prohibited Transaction Exemption 84-24 (ZRIN 1210-ZA25).

Response excerpt:

NAFA is pleased to have the opportunity to comment on the Proposed Rule and generally supports the Department’s efforts to provide enhanced protections for consumers in the retirement marketplace.

However, as currently drafted, the Proposed Rule requires significant refinements to ensure that Americans continue to have access to fixed annuities and to the financial professionals who provide the education and services necessary to service their clients. This is especially true for consumers who have investable assets of less than $250,000. At a time when a huge retirement savings gap exists, compounded by the fact that Americans are living longer, regulatory efforts must not hinder the principal-protected savings and lifetime income options uniquely provided by fixed annuities.

The Department appropriately recognizes that non-security annuities — in other words, fixed annuities — are insurance products and asks in its preamble to the Proposed Rule whether the line between insurance and annuity products that are securities and those that are not has been correctly drawn.1

NAFA appreciates the opportunity to answer the Department’s invitation to comment on the disclosure requirements and other applicable standards governing fixed annuities, the distribution methods and channels applicable to fixed annuities, the common structure of insurance agencies, and the applicability of the Best Interest standard to fixed annuities. However, NAFA contends that fixed annuities are different from securities investments, and we believe the Proposed Rule must not be written so broadly that it has an adverse effect on insured retirement savings and on the insurance professionals who provide consumers with education and retirement advice on fixed annuity products.

>> Read the full response here.

>> Or, visit our Advocacy Update page for a summary of events related to the Department of Labor’s proposed fiduciary duty rule.

1 Proposed Best Interest Contract Exemption, 80 Fed. Reg. 21975