The head of an agency of the U.S. Labor Department promised Wednesday that the department has no interest in using annuitization as an excuse to help itself to private retirement savings.
Phyllis Borzi, the Labor Department assistant secretary in charge of the Employee Benefits Security Administration, talked about the department’s interest in the lifetime income issue Wednesday during a hearing organized by the Senate Special Committee on Aging.
Sen. Herb Kohl, D-Wis., chairman of the committee, is working with other senators to promote S. 2823, the Lifetime Income Disclosure Act bill. The bill would require employers to show workers how much the workers would get in retirement income if their defined contribution retirement plan assets were annuitized.
Today, with the shift toward use of defined contribution plans, rather than the traditional defined benefit pension benefit plans, workers are responsible for making their own savings last for a lifetime, but “few employers provide employees with lifetime income options,” Kohl said at the hearing.
The Labor Department and the U.S. Treasury Department recently joined to put out a request for information from members of the public about the lifetime retirement income issue.
The request attracted more than 800 responses, and many of the comments submitted by individuals came from people who said they are worried that the request for information “is a first step in a government plan to take over work 401(k) plans,” possibly by forcing workers to buy government bonds or other government products, Borzi said.
Kohl addressed that concern in his own opening statement.
“I want to be clear that no one should be forced to buy a lifetime income product,” Kohl said.
Borzi also insisted that EBSA and the Obama administration have no intention of taking over workers’ 401(k) plans.
“We do not support a government takeover of private retirement plans,” Borzi said.
The Labor Department and the Treasury Department simply want to know of promoting lifetime income vehicles is a good idea, and, if so, if there are ways for the government to ease access to lifetime income vehicles, Borzi said.
William Mullaney, president of the U.S. business at MetLife Inc., New York (NYSE:MET), appeared at the hearing on behalf of the American Council of Life Insurers, Washington.
The ACLI supports S. 2832, and it also supports H.R. 2748, a bill that would create a limited annuitization tax incentive, Mullaney said.