WASHINGTON BUREAU — If the government wants employer-sponsored retirement plans to offer lifetime income options, then Congress should protect employers against the risk that the options might produce disappointing results.
Witnesses delivered that message here during a lifetime income option hearing organized by the U.S. Treasury Department and the U.S. Labor Department.
Federal agencies have been talking about the idea of encouraging employers to offer lifetime income vehicles to participants in 401(k) plans and other defined contribution plans.
Representatives from insurers and employers emphasized the need for “safe harbors” plan sponsors can use when choosing annuity providers or other lifetime income product providers.
“As employers, we welcome the development of public policies that would facilitate the design of new lifetime income options that are less complex and have lower costs than available today,” said Janet Boyd, director of government relations for The Dow Chemical Company, Midland, Mich., who testified on behalf of the American Benefits Council, Washington.
“Major employer would like to help employees,” said Allison Klausner, an assistant general counsel at Honeywell International Inc., Morristown, N.J., who testified on behalf of the ERISA Industry Committee, Washington.
But employers “are concerned that any assistance that they provide will expose them to fiduciary liability under ERISA — that no good deed will go unpunished,” Klausner said.
Klausner said the Department of Labor should make it clear that employers can help employees choose a distribution option without subjecting themselves to fiduciary liability and litigation.
Christine Marcks president of Prudential Retirement, a unit of Prudential Financial Inc., Newark, N.J. (NYSE:PRU), said the Labor Department should extend the current safe harbor to cover a broad range of lifetime income options.
“The department should explicitly extend the safe harbor, and, if necessary, appropriately modify it, to include a broad range of guaranteed lifetime-income solutions,” Marcks said.