Today the SPARK Institute – which represents the interests of retirement plan service providers and investment managers, including banks, mutual fund companies, insurance companies, third party administrators and benefits consultants – has released for public comment a draft of detailed information sharing standards and data records for lifetime income solutions that are used in retirement plans. According to General Counsel Larry Goldbrum, “These standards will make it more feasible and cost effective for record keepers and insurance carriers to make retirement income solutions available to plan participants.”
According to Goldbrum, the standards will “…allow customer-facing record keepers to offer one or more products from unaffiliated insurance carriers; will facilitate portability of products when a plan sponsor changes plan record keepers (record keeper portability); and will support portability of guaranteed income when a participant has a distributable event in the form of a rollover to a Rollover IRA or as a qualified plan-distributed annuity (participant portability).”
The proposed standards were developed by a SPARK Institute task force of more than 80 individuals from 35 member and non-member companies, including, according to the announcement, “the insurance companies at the forefront of the products currently on the market, as well as record keepers and other trade organizations”.
According to the announcement, the standards accommodate such in-plan options as fixed deferred annuities, guaranteed minimum withdrawal benefits (GMWB) and guaranteed minimum income benefits (GMIB) solutions under several different service models followed by insurance carriers, including a record keeper traded model, provider traded model and guarantee administrator model. “They were designed to be flexible and accommodate as many products and services as reasonably possible, but still maintain a reasonable degree of certainty so there are reliable common standards among users,” Goldbrum said.
The document, “Data Layouts for Retirement Income Solutions,” is posted on The SPARK Institute website at http://www.sparkinstitute.org/comments-and-materials.php.
The SPARK Institute says you do not have to be a SPARK Institute member to comment on the standards. Comments are due by Friday, August 13 and should be submitted to email@example.com.
With the growing importance of retirement income solutions for American workers, providers have begun developing innovative products to address the need,” Goldbrum said. “But, since the absence of standards for sharing necessary information among the insurance product providers and unaffiliated record keepers was an impediment to more widespread access to these products, our members asked us to develop industry standards as we did for 403(b) plans.”
“We believe strongly in the importance of lifetime income solutions in DC plans and the importance of providing a practical solution to the portability challenge,” said Charlie Nelson, chairman of The SPARK Institute and president of Great-West Retirement Services®. “The SPARK Institute standards eliminate the portability challenge by providing a practical and innovative solution that record keepers and product providers in the DC market can use to make lifetime income products portable.”