Sen. Patty Murray, D-Wash., the ranking minority member on the Senate Health, Education, Labor and Pensions (HELP) Committee introduced legislation Monday requiring pension plan sponsors to provide plan participants and retirees with “critical information” about lump-sum buyouts — which she says are not protected and put less money in retirees’ pockets.
Murray’s Information Needed for Financial Options Risk Mitigation, or Inform, Act comes one year after the Trump administration reversed an Obama administration proposal that would have banned lump-sum payouts.
“No one should ever have to make a decision that could seriously affect their plans to securely retire without being given all the information they need to understand the consequences,” Murray said in a statement.
“While President Trump has made it clear he’s more concerned with companies’ profits than their workers, I’m fighting to make sure everyone who gets offered a buyout of the pensions they were promised and have earned, also gets the information they need to choose what’s best for their financial future.”
Murray noted a 2015 Government Accountability Office report, which found that companies were offering lump-sum buyouts to retirees without key information participants needed to make informed decisions. The Treasury Department at the time announced it would write new rules effectively ending these buyouts.
Last March, however, the Trump administration reversed course, and Murray pressed administration officials to justify the decision.
While pensions are covered by the Employee Retirement Income Security Act protections and are backed by the Pension Benefit Guaranty Corp., lump-sum payouts have no such protections, Murray said.
The legislation would require plan sponsors to provide participants and beneficiaries with a paper notice to affected participants and beneficiaries 90 days before the period in which they must make a decision.
“The required notice would include information that would allow people considering what’s best for their financial futures to compare between benefits offered under the plan and the lump sum, and would explain how the lump sum was calculated, the ramifications of accepting a lump sum such as the loss of certain federal protections, details about the election period, where to follow up with questions, and other information,” according to a summary of the bill.
The bill would also require a comparison of benefits, explanation of how the lump sum was calculated, ramifications of accepting a lump sum such as the loss of certain federal protections, details about the election period, and where to follow up with questions to be included in the notice.