Mississippi Is Latest State to Embrace NAIC Annuity Sales Rules

Supporters of the NAIC annuity transaction suitability model say a fiduciary-only approach to annuity purchase advice would limit consumer choice—a claim its opponents dispute.

Back in February 2020, the National Association of Insurance Commissioners (NAIC) granted final approval to its revised model regulation that sets conflict-of-interest rules for insurance producers to follow when recommending annuity products to their clients.

The development came after years of work by the NAIC on the development of updated “best interest service” rules applying to insurance agents and representatives selling annuity products. With the NAIC’s approval, state insurance regulators became free to adopt the model regulation into their own insurance regulations.

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By way of background, the NAIC is the United States’ standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, Washington, D.C., and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews and coordinate their regulatory oversight.

Fast-forward to this month, and Mississippi has just become the 18th state to adopt the enhanced protections for annuity consumers, which closely align with the Securities and Exchange Commission (SEC)’s Regulation Best Interest (Reg BI). With the move, Mississippi joins a growing list of states that have done the same, including Arizona, Arkansas, Idaho, Iowa and Ohio. Notably, some other states have taken steps to create their own local frameworks that are more restrictive than the NAIC model, including the more progressive state of New York, although its approach is the subject of ongoing litigation.

One matter that could potentially complicate the widening implementation and enforcement of the NAIC’s suitability framework is the fact that the Biden administration could choose to modify, update or even rescind Reg BI, though sources say this is far from a given. While such a move would not entirely derail what the states have done, given that the safe harbors often also cite the Investment Advisers Act or the Department of Labor (DOL) fiduciary standards, the elimination of Reg BI could cause ambiguity in the different state-based conflict of interest rules.

Regarding Mississippi’s decision, American Council of Life Insurers (ACLI) President and CEO Susan Neely and George Pickett, a member of the National Association of Insurance and Financial Advisors (NAIFA) Government Relations Committee, issued the following joint statement, praising the development: “Retirement savers seeking lifetime income from annuities should work with financial professionals who act in consumers’ best interest. The rule adopted by the Mississippi Insurance Department makes certain that they will. Mississippi is the 18th state to adopt enhanced protections for annuity consumers. … Unlike a fiduciary-only approach, these measures ensure that all savers, particularly financially vulnerable middle-income Americans, can access information about different choices for long-term security in retirement. … We urge more states to follow Mississippi’s example and implement this sensible consumer protection. Then, more consumers working to protect their family’s financial future would benefit from a best interest standard of care, no matter where they live.”

The 2022 Retirement Landscape Takes Shape

The U.S. faces a $4 trillion retirement savings gap heading in the new year, but both public and private solutions are coming online to help more people prepare adequately for life after work.


The widening retirement savings gap, improving financial wellness and adjusting to lower return expectations are three themes shaping the U.S. retirement landscape going into 2022. A new study shows the events of the past two years have either accelerated these themes or shined a spotlight on them, and the response of individual savers, employers and those that advise them is evolving as well.

According to T. Rowe Price’s 2022 “U.S. Retirement Market Outlook” study, the retirement savings gap—i.e., the difference between what retirement savers need and what they have accumulated—is now approaching an estimated $4 trillion, exacerbated by recent economic shocks. While defined contribution (DC) plans are now the vehicle most individuals use to accumulate wealth for retirement, only 64% of private-industry workers have access to one, such as a 401(k)—and even those with access may still come up short in meeting their retirement needs.

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The T. Rowe Price study notes that almost 40% of workers overall are not covered by any workplace retirement plans, but there are some notable differences according to the labor sector. For starters, larger businesses are more likely to offer DC plans than smaller business. According to the study, 78% of workers at companies with more than 100 employees are covered by DC plans, compared with 51% of those who work for companies with fewer than 100 people.

The top 20% of wage earners, or those making an average of $140,000 per year, are twice as likely to be covered by a DC plan than the lowest-earning 20%, who make an average of $27,000 per year. White households were measurably more likely to hold retirement accounts than Black households and more than twice as likely as Latino households to do so. Women, too, face challenges in accumulating sufficient wealth for retirement, due to fewer years in the workforce, for example as a result of child care and other care obligations, as well as historic wage inequality.

Lack of access to a retirement plan may be a significant challenge, but it is not the only one many people encounter when saving for retirement. Longer lifespans in retirement are putting pressure on workers to have more money put away, such that this is the top concern cited by both industry professionals and employers, including when they are choosing default investment options.

Financial Wellness

As the retirement plan landscape evolves, financial wellness is increasingly seen as a critical solution to help workers and retirees meet their goals. There is a growing recognition that the retirement savings gap is unlikely to be erased without improving the shorter-term financial wellness, resiliency and well-being of those enrolled in DC plans. Simply put, T. Rowe Price says, the pandemic has woken up the industry to the importance of financial wellness, as those who needed money during the past two years might have tapped into their retirement savings.

Employers are struggling to recruit and retain workers who are looking for new opportunities. For a variety of reasons, the competition for labor is more intense than ever, and the situation shines a spotlight on the need for employers to offer more competitive benefits, including those tied to comprehensive financial wellness. T. Rowe Price finds there has been an acceleration in the adoption of these programs, as 59% of industry professionals expect the demand for financial wellness programs to grow.

The study shows that 78% of employees rely on their workplace for advice and support on how to achieve lifetime financial goals. About half of workers reported moderate to high levels of financial stress related to managing debt and health care expenses, budgeting, saving for retirement, managing their investments and other goals, which has led to consequences for both the struggling workers and their employers.

Wellness and Employee Engagement

According to a study by Willis Towers Watson (WTW), workers who are struggling financially lose 44% more work time to absences than peers without financial worries. Similarly, workers who are struggling financially have lower engagement levels at work than peers without financial worries. Of all workers surveyed, 53% indicate that saving for retirement is the area they most want help from their employer.

As demand for financial wellness programs is expected to grow, employers are well-positioned to help their workers with advice and support. The research from T. Rowe Price shows that, during the early days of the pandemic, 47% of workers said their level of financial stressed increased, with 39% seeing a reduction in pay, 23% missing one or more monthly bill payments and 23% of savers tapping into retirement savings to pay for day-to-day expenses.

Of those surveyed, 9% used at least one of the coronavirus relief package provisions that allowed workers to withdraw funds from their retirement accounts without penalty. Nearly a quarter (23%) of those who withdrew money, mostly between the ages of 40 and 50, claimed they would replace the amount withdrawn. However, by the end of 2020 less than 1% had done so.

Positive participant views of digital education content on financial wellness topics increased from 15% in the first quarter of 2020 to 49% in the second. Content on managing debt, emergency savings and financial wellness checklists were of particular interest. This makes sense, T. Rowe Price says, as the struggle to balance competing financial needs is having a significant impact on employees. Of those who are not saving, 31% cite day-to-day living expenses, 14% cite credit card debt and 11% cite student loan debt as the primary reason why.

The full study, “U.S. Retirement Market Outlook,” is available here.

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