The insurers want the government to extend and clarify "safe harbor" protection, which exempts employers from liability, so they can add annuities as an option in 401(k) retirement plan, as well as allow annuities to be a default investment option.
Annuities are insurance contracts that guarantee payments in exchange for upfront payments. Employers have been reluctant to adopt annuities because of concerns about fees and potential liabilities in picking the insurers.
Life expectancies are increasing and savings have shifted from traditional pension plans, where participants are guaranteed a lifetime payment to defined contribution plans such as 401(k)s, according to the Labor Department.
Participants in defined contribution plans increased to 67 million in 2007 from 11 million in 1975. An estimated 47 percent of Americans born between 1948 and 1954 may not be able to afford basic expenses and uninsured health-care costs through retirement, says the Employee Benefit Research Institute.