When is lifetime income not an annuity? The addition of “lifetime income investment strategies including longevity risk-sharing pools” in an Executive Order related to alternative investments may be a reference to modern tontines only and not annuities. The flurry of activity around this announcement has focused on everything else under the umbrella of alternatives, but this question has piqued the interest of some in the ERISA crowd.
For those unfamiliar with the concepts, the difference between the two ultimately comes down to insurance. Like an annuity, the modern tontine uses actuarial data but without a guarantee. The underlying investments may seek more growth, which would also entail more potential variability. However, the use of longevity pooling stabilizes payments and allows the investment to pay more than you would expect otherwise.
As someone who talks about annuities in retirement plans constantly, it may come as a surprise that I would push back on the idea that “Democratizing Access to Alternative Assets for 401(k) Investors,” issued August 7, 2025, embraces annuities. After all, plan sponsors have been clamoring for guidance when it comes to annuities in retirement plans—and this Executive Order calls on the Secretary of Labor to do just that.
While there is an argument that the phrase “lifetime income investment strategies” refers to annuities, the Executive Order states that it is solving the problem of access to certain types of investments because “the vast majority of these investors do not have the opportunity to participate, either directly or through their retirement plans, in the potential growth and diversification opportunities associated with alternative asset investments.”
Simply put, plenty of people have access to annuities. The industry reported record-breaking sales for the first half of 2025, totaling $223 billion (LIMRA). Sales for 2024 reached $434 billion. Adding annuities to retirement plans would improve access for the vast majority of workers who do not seek professional advice when they retire, particularly those with more modest balances but want more guaranteed income than they will receive from Social Security alone. However, the numbers demonstrate that there is already a robust retail market that serves many retirement savers.
The Executive Order is quite clear that it concerns alternative assets, which “are an increasingly large portion of the portfolios of public pension and defined-benefit retirement plans and offer competitive returns along with diversification opportunities.” This description applies poorly to annuities. Though annuities can be a valuable part of an asset allocation and help mitigate risk, they are not a key growth asset class for institutional investors.
The first five alternatives listed are private assets, real estate, cryptocurrency, commodities, and infrastructure financing. In contrast to all of these, annuities are insurance. As such, they have an established regulatory framework that extends beyond the products themselves into the management of the insurance companies themselves.
The Executive Order fails to mention the state regulators as part of the coordination effort; this could be casual oversight or further evidence that annuities are excluded. By contrast, longevity risk-sharing pools are, as the Order describes, investment strategies that are regulated as such.
But reading the tea leaves on this topic will become moot in a few short months. It may well be, as some have stated, that annuities fit the overall objective of improving participant wellbeing and fostering innovation by combating “regulatory overreach and encouragement of lawsuits filed by opportunistic trial lawyers.”
Where is my enthusiasm for the prospect of policy clarity and guidance?
In this case, it has gone the way of ESG investing. The private asset conversation has stirred much enthusiasm in certain circles and concern in others, which is a recipe for future policy volatility on the topic. A green light may flick to red in a few years. And the dreaded plaintiff’s bar, which the policy is designed to stave off, is keenly aware of the opportunity that comes with shifting winds. Tossing annuities in the same bucket as cryptocurrency and the rest may further fan those flames without helping in the way that plan sponsors hope.
After all, the evidence is strong that retirees value guaranteed lifetime income. The annuity challenge has been helping them understand how they work and making a decision that may be irrevocable. Plan sponsors have been clamoring for guidance in making decisions and want clear safe harbor protections when they do, but the nature of these concerns are far afield from that of alternatives.
Tamiko Toland is the Founder and CEO of the 401(k) Annuity Hub, a new market intelligence solution for plan sponsors and fiduciaries that provides education and a selection process for guaranteed lifetime income in retirement plans. She is a recognized thought leader and award-winning educator affectionately known as the “annuity Yoda.”
