The Alliance for Lifetime Income took its financial literacy campaign to the streets of Manhattan yesterday with “Protect Your Retirement Income Day.” The program is designed to raise the public’s awareness of annuities as a form of protected income—at a time when creating income is increasingly a challenge in retirement as pensions become instinct.

“More dialogue needs to take place around the aspect of retirement income,” said Stephen Pelletier, chief operating officer with Prudential, a member company of the Alliance. “That’s how people live their lives.”

The nonprofit 501(c)(6) Alliance for Lifetime Income organization was launched in June to educate Americans about protected lifetime income, also known as annuities, as a way to create an income stream in retirement. It provides tools, resources and insights to its member companies that they can use to build plans for protected retirement income.

“The two efforts to educate is with the financial advisor and the consumer,” said Jean Statler, executive director of the Alliance for Lifetime Income. “If there’s more consumers asking about how to get protected lifetime income, then we have to work with financial advisors on how to provide it. Why have they gone away from it? Why don’t they offer it and work with them to close that gap?”

Members that make up the alliance include financial services organizations such as AIG, Allianz, Lincoln Financial Group, Jackson and many others.

Consumer awareness initiatives yesterday included the unveiling in Times Square of a custom alliance vehicle featuring a virtual reality experience about risk and the national debut of a television advertising campaign called “Retire Your Risk.”

“We are trying to increase consumer awareness of the options they have at retirement to provide guaranteed income,” said Michael Finke, chief academic officer at the American College of Financial Services. “The hope is informed consumers will translate into better choices and they will look for guaranteed income options within their 401(k) or talk to a financial advisor. If the consumer doesn’t know to ask, they may be overlooking a financial product that research shows provides value.”

Statler, Pelletier and Finke were among a number of panelists at a media breakfast hosted at the Times Square W Hotel by the Alliance that included AIG Retirement CEO Jana Greer; Jackson National CEO Barry Stowe; Lincoln Financial President and CEO Dennis Glass; and Benjamin Harris, an Alliance research fellow.

“The emerging retirement crisis in the United States is not what we normally talk about, which is accumulation,” Stowe said. “The retirement crisis is creating income.”

According to the experts, the crisis is partly due to longer life spans and the absence of pensions, also known as defined benefit (DB) plans, at a time when Social Security only replaces about 40 percent of preretirement income.

“When you had DBs, you didn’t need annuities, but DBs are gone,” said Harris, the former chief economist and economic advisor to former Vice President Joe Biden. “The 401(k) system arose by accident. It was never designed to be what it is today, and like a lot of policies that arise by accident, there are problems with it.”

As defined benefit plans are phased out, defined contribution options are taking precedence.

From 1980 through 2008, the proportion of private wage and salary workers participating in pension plans fully funded by their employers fell from 38 percent to 20 percent, according to the Bureau of Labor Statistics. That’s compared with an increase from 8 percent to 31 percent of workers whose contributions are matched by an employer in a retirement account owned and controlled by the employee.

“The first generation of defined contribution investors is approaching retirement right now, and lack of clarity is creating anxiety,” Finke said. “You don’t know how many years to fund or the rate of return you’re going to get, and there’s always going to be a chance that it will run out.”

Most retirees will need 70 percent of their preretirement earnings to comfortably maintain a preretirement standard of living, according to the Social Security Administration, which means they will need other sources of income.

“Many Americans live paycheck to paycheck, so accumulation obviously is a critically important part of the equation,” Stowe said. “But ultimately, what gives people the most security, the most freedom, freedom from worry and freedom to pursue their interests in retirement is a guaranteed income.”

However, the sales of annuities have been struggling of late as financial advisors are increasingly seeing their trailing commissions cut on the sale of variable and fixed-annuity contracts. In 2017, total annuity sales decreased 8 percent from 2016 to $203.5 billion, according to the LIMRA Secure Retirement Institute’s fourth quarter “2017 U.S. Individual Annuity Sales Survey.”

“No industry is perfect, and our industry has an enviable track record providing security,” said Stowe. “Even in instances where companies may look back and realize they didn’t get the pricing right, you don’t see situations where consumers get disadvantaged. You see shareholders or advisors but not consumers, and ultimately that’s the most important relationship.”