Compliance January 30, 2023

SECURE 2.0 Makes a Few Changes to Annuities

While not the focus of the bill, annuities gained increased flexibility and availability.

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The SECURE 2.0 Act of 2022, the retirement reform legislation that passed in December 2022, aimed to increase retirement access and security for Americans, primarily by reforming defined contribution plans.

SECURE 2.0 contains few reforms related to annuities, despite research showing both their popularity among workers and that Americans lack knowledge about their own life expectancy. Though the reforms made to policies addressing annuities in SECURE 2.0 are few in comparison to the changes made to defined contribution retirement plans, or even defined benefit plans, the legislation still has some impact on annuities.

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Section 201 of SECURE 2.0 removes availability barriers to some life annuities in tax-advantaged retirement accounts. Previously, required minimum distribution tests limited the availability of some lifetime annuities which had large benefit increases from year to year. SECURE 2.0 allows these annuities to increase at a constant percentage, no more than 5% per year.

Section 202 seeks to make Qualified Longevity Annuity Contracts easier to invest in. The section raises to $200,000 the cap on how much money a participant can use from their retirement account to purchase a QLAC. It used to be either 25% of the account’s value or $125,000, whichever was greater. The new figure of $200,000 is also indexed to inflation, whereas the previous $125,000 maximum was not.

Additionally, according to Elizabeth Dold, a tax attorney and executive committee member at the Groom Law Group, Section 204 allows a retiree with a partially annuitized plan to combine the payments from both the annuity and the plan for the purposes of calculating their required minimum distribution. Previously, the two accounts had to be separated, each with their own RMD calculation, which could result in higher RMD payments than if they were counted together.

This allows the assets in the plan to potentially continue to grow, giving the retiree more flexibility in their retirement planning going forward.

Deals & People January 30, 2023

New York Life Investment Management Names New CEO

The country’s largest mutual life insurer taps Naïm Abou-Jaoudé from a subsidiary to head its investment division, overseeing $371 billion in AUM.

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New York Life announced Monday that Naïm Abou-Jaoudé will move from his position as head of one of the company’s European asset management subsidiaries to the CEO of its investment arm, New York Life Investment Management.

Abou-Jaoudé will leave his current position as CEO of Candriam, which has $149 billion in assets under management, to lead the company’s investment division with $371 billion in AUM, according to the announcement. He will start the new role on May 1 and report to Alain Karaoglan, head of strategic businesses at New York Life.

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Abou-Jaoudé takes the role after former investment head Yie-Hsin Hung left the firm in September 2022 to become CEO and president of State Street Global Advisors, according to a State Street announcement. Hung was named CEO of New York Life Investment Management in 2015, having joined the firm in 2010 to run the institutional investment business.

The investment division of New York Life has doubled its AUM in the past decade, in part through expansion and acquisition, according to the firm. The asset management division offers investment advice along with its mutual funds, exchange-traded funds and alternative asset investments, among other investment vehicles, according to the company website. The firm had about $13 billion in defined contribution investments as of December 31, 2021, according to the most recent data from PLANADVISER’s DCIO survey.

Abou-Jaoudé joined New York Life through the firm’s acquisition of Luxembourg-based Candriam in February 2014. He has been CEO of the division for 16 years and oversaw a doubling of AUM at the company since the acquisition.

“Candriam is one of the fastest-growing asset managers in Europe, a success story we’re very proud to share. … I have full confidence that under Naïm’s direction, NYLIM including Candriam will continue on their growth trajectories,” Karaoglan said in a statement.

Vincent Hamelink, Candriam CIO, will take over as CEO of the subsidiary, effective May 1, according to New York Life. At that time, Abou-Jaoudé will transition to chair of Candriam’s board of directors.

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