Bipartisan bill requires retirement plans to include lifetime income reports
- A bipartisan bill would require retirement plans to include yearly income reports showing employees what their post-work days will look like based on current savings, writes Employee Benefit News. The Senate bill, the Lifetime Income Disclosure Act of 2017, would estimate how much plan participants could take out of their accounts each month during retirement.
- An Insured Retirement Institute study shows that 75% of retirement plan participants said they would raise their contributions by 4% to 7% if they had access to lifetime income reports, says EBN.
- Bob Collie, chief research strategist at Russell Investments, told EBN that the retirement plan industry is trying to make defined contribution plans resemble defined benefit plans, with features such as auto-enrollment and auto-escalation. He said the purpose is to make plan participation easier for account holders.
Retirement plan participants are serious about saving for their post-work lives but need more information, as the study results indicate. The new Senate bill would show them how much money they need for a comfortable retirement and be an incentive to those who haven’t saved enough to contribute more.
The lifetime income report would estimate savings, much like mortgage amortization calculations. Employees would have a better understanding of how their plan works and more control over their accounts, a problem that currently plagues savers of all ages. It's also one reason financial wellness has emerged so strongly in recent years, as retirement stress is a severe cause of general stress (and thus, lower productivity).
The bill's bipartisan support is in contrast to embattled state auto-IRA programs. Republican lawmakers said they oppose auto-IRA programs because they’re burdensome for employers, might end up charging high fees and get around stringent regulations covering IRAs. Solutions for retirement may be one of the few things to get both national and state attention in coming years.
- Employee Benefit News Could a retirement plan report push employees to save?