ACLI Pushes Federal Policy to Boost Annuity Access in U.S. Retirement Plans

The American Council of Life Insurers (ACLI) has urged U.S. lawmakers to support federal policy reforms aimed at enhancing access to annuities within workplace retirement plans. These reforms seek to assist more retirement savers in converting defined contribution plan balances, such as 401(k) or 403(b) accounts, into guaranteed lifetime income streams, addressing rising demand for financial security in retirement. ACLI's proposals include mandating the offering of annuity options within defined contribution plans, enabling participants to elect immediate single-life or joint-and-survivor annuities for all or part of their account balances. Additionally, ACLI advocates revising the Internal Revenue Code and Employee Retirement Income Security Act (ERISA) regulations to permit annuities as default investment options in retirement plans, conditional on disclosure of any liquidity restrictions to participants. Another recommendation targets older workers by allowing in-service rollovers for individuals aged 50 and above to purchase annuities while still employed. The group further seeks explicit guidance in tax code model rollover notices to highlight annuity options under Section 408(b) of the Internal Revenue Code. Market data supports the increasing popularity of annuities, with LIMRA reporting a 4% growth in total U.S. annuity sales in the first half of 2025 compared to the same period in 2024. Projections suggest annual sales could surpass $400 billion, underlining a significant upward trend in guaranteed income products. Analysts from AM Best maintain a stable outlook on the U.S. life and annuity sector, reinforcing its capacity for sustained growth supported by robust capital positions and steady top-line performance. The ACLI underscores that while Americans have diverse retirement income strategies, annuities remain the only true lifetime income products guaranteeing that retirees do not outlive their savings. This unique feature situates annuities at the core of ACLI's retirement income policy agenda. These federal policy proposals aim to align regulatory frameworks with market demand, potentially transforming retirement income security options and strengthening the role of life insurers in the retirement planning ecosystem.