The reaction of pension industry companies and professional trade groups to the Labor Department’s proposal to require 401(k)s to illustrate lifetime income streams? Good idea, but …

Industry leaders generally applauded the idea in comments to the Labor Department—which ceased formally accepting responses today—but a number of the 80 individuals, businesses and organizations that weighed in offered tweaks.

The Labor Department said it made the proposal to emphasize with workers that defined contribution plans are designed more for income replacement than as a savings nest egg.

The American Society of Pension Professionals & Actuaries (ASPPA) called for the disclosures to be focused and concise, with illustrations of 3-percent, 5-percent and 7-percent annual rates of return.

The group also said the lifetime income calculation should be done without any assumption that there will be future contributions by the employer or the employee because future contributions are rarely guaranteed.

In addition, the ASPPA recommended that the Labor Department’s final rule include a “safe harbor” protecting plan sponsors for the assumptions used in calculating the lifetime income stream, with the assumptions modified to keep the cost of providing the lifetime income estimates reasonable.

Among the modifications the ASPPA suggested are setting the time period for the projection as a static age and limiting the form of distribution to a single life annuity and a 50-percent joint and survivor annuity for a spouse of the same age, to make results across multiple plan sponsors more consistent.

In lieu of the safe harbor approach, the Insured Retirement Institute (IRI) wants the agency to adopt a rule under which plan sponsors would be required to provide lifetime income illustrations based on generally accepted investment theories and generally accepted actuarial principles

“We are concerned that including specific assumptions in the safe harbors described in the notice will steer plan sponsors to utilize those assumptions to ensure compliance at the expense of flexibility and innovation,” IRI said.

Aon Hewitt said basing the illustration on current account balances would have little value for plan participants. For those who haven’t reached a normal retirement age, the company said the illustration would not accurately show the lifetime income participants are eligible for immediately or the income they would get if they waited to the usual age to stop working.

Aon, the largest independent retirement benefit plan administrator in the nation, called for the illustrations to be based on a participant’s actual age and projected annuity benefit at normal retirement age—illustrations the consultant said many 401(k) plans are already providing.

Aon Hewitt faulted the proposal for not including annuity fees in the calculations.

“Participants may feel misled by the illustration if annuity fees are not addressed,” the company said.