Testifying before the Department of Labor’s ERISA Advisory Council today, ABA VP Tim Keehan urged DoL to develop educational resources for defined-contribution retirement plan participants to calculate the income streams they can expect from their savings — instead of imposing a mandate for plan sponsors to include lifetime income calculations on account statements.
Keehan said that mandating disclosures of expected lifetime income on statements would be “neither accurate nor meaningful,” since the static information would not help retirement savers know how much more they would need to save to meet their goals. “Rather, we believe that ongoing investor education and participant initiative is the best way to cultivate sound retirement savings habits.”
Keehan encouraged DoL to provide online resources comparing historical returns for different asset classes and a calculator that would incorporate asset class performance, savings rate and individual risk tolerance. He also called on DoL to produce a one-page savings chart demonstrating the monthly income streams for different tiers of total savings that plan sponsors could include as a statement stuffer, “allowing the participant to see readily how his savings can increase if he were to allocate more of his salary to his 401(k) account.” For more information, contact Keehan.