Retirement planning groups are weighing in with their reviews of the Department of Labor’s proposed rule that would require lifetime income illustrations be given to participants in defined contribution plans, such as 401(k)s and 403(b)s.
In early May, DOL’s Employee Benefits Security Administration announced that it was seeking public input on the proposed rule, and said it would take comments until July 8. However, that comment period was extended until Aug. 7.
Phyllis Borzi (left), assistant secretary of Labor for EBSA, said in releasing the proposal that EBSA is “looking for the best ideas on how to show people what their lump-sum retirement savings look like when they are spread out over all the years of retirement.” Retirees, she said, “run the risk of outliving their savings. If workers have the benefit of seeing how long their savings could last, it might spur better planning for the future, such as adopting more effective savings strategies.”
A bipartisan group of senators took a cue from the DOL when they introduced a bill in mid-June that would allow workers in retirement plans to receive an annual statement of how their lump-sum savings translate into a lifetime stream of monthly income.
The Lifetime Income Disclosure Act was introduced by Sens. Johnny Isakson, R-Ga.; Christopher Murphy, D-Conn.; Tim Scott, R-S.C.; Bill Nelson, D-Fla.; and Elizabeth Warren, D-Mass.
The companion bill, H.R. 2171, was previously introduced in the House by Reps. Rush Holt, D-N.J.; Tom Petri, R-Wis.; Ron Kind, D-Wis.; and Dave Reichert, R-Wash.
The Insured Retirement Institute told EBSA in its comment letter that it is “highly supportive” of EBSA’s initiative as it enhances “Americans’ understanding of their retirement savings and helps them effectively” plan for retirement.