Federal Roundup

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The 2012 Election dust has settled and it appears to have produced “status quo” results in terms of the overall balance of power in Washington.

Currently, Congress and the Administration are eagerly attempting to find solutions to the so-called “fiscal cliff” and partisanship is rapidly growing. It is our best guess that a short-term fix will happen at the end of the “lame duck” session and real reform will occur next year. Despite the all too familiar partisan tone, it is important to recognize that this does not necessarily mean there will be total gridlock at the federal level or that the fixed annuity industry will be facing no new threats. NAFA believes that the fixed annuity industry will continue to face significant, and likely growing federal legislative and regulatory threats. NAFA wants to assure our members that we will remain active and vigilant in Washington on key policy areas that impact our members, and that we are working hard to be prepared to meet any challenge that arises.

To illustrate the political challenges that we will be facing, we need to look no further than the fiduciary standard debate, which many observers thought was on long-term hold or possibly dead at the federal level. The election outcome likely guarantees further action from the Department of Labor and the SEC. Congress will inevitably be involved in some manner in this fiduciary debate, and we anticipate action to resume early next year. On the DOL front, we understand that Secretary Borzi intends to move forward with a re-proposal of an expanded ERISA fiduciary standard that we will be likely released for comment by next March. As always, NAFA will continue to seek a workable seller’s exception that would cover IRA’s and include fixed annuity products. As part of this exception, there must be a clear line between what is considered education and investment advice. On the SEC front, Chairman Shapiro recently announced her resignation, and the President said he would nominate Elisse Walter, who was put on the SEC by George W. Bush in 2008, for promotion to Chairman. Ms. Walter was previously a top official at the Financial Industry Regulatory Authority and worked at the National Association of Securities Dealers. We still anticipate that the SEC will move forward on a uniform fiduciary standard rule for broker-dealers and investment advisors, but first expect a formal RFI to ensure proper cost benefit analysis.

Thus, we must continue to be very engaged on the fiduciary standards issue and defend the insurance sales transaction and the strong NAIC suitability standards that protect consumers. Additionally, given the fiscal cliff and current national deficit and debt issues, tax reform will necessarily be a major focus of Congress and the Administration. We are told that “everything” will be on the table, including the tax treatment of annuities. Therefore, NAFA will be focused heavily on preserving the current tax treatment of annuities. We will be educating more federal officials about how our products are vital to helping millions of Americans meet their retirement income needs during these tough economic times.

Lastly, we are still waiting for the long overdue Federal Insurance Office report on modernizing insurance industry regulation.

Please stay tuned for continuing updates on how NAFA is working to defend our industry’s interests in Washington, and how you can help us in these critical efforts


NAFA, the National Association for Fixed Annuities, is a national trade association exclusively dedicated to promoting the awareness and understanding of fixed annuities. NAFA is the only association whose sole purpose is advocating for the fixed annuity product.

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