New rules that would require defined contribution plans to express accounts as estimated lifetime income streams are being proposed by the U.S. Department of Labor.
The department’s Employee Benefits Security Administration announced on Tuesday it is seeking public comment on the proposed rules, citing the need to “change the perception of retirement savings from simply a saving account to a vehicle for income replacement during retirement.”
Under the rules, plan providers would be required to issue reports that include both account balances and projected monthly payments after an account holder retires. Providers would also be required to project account holders’ accrued benefits to their retirement dates.
Each benefit statement would contain one monthly estimated payment illustration based on the current balance and another based on a projected account balance.
“The department intends to consider all reasonable alternatives to direct regulation, including whether there is a way short of a regulatory mandate that will ensure that participants and beneficiaries get constructive and helpful lifetime illustrations,” the DOL said in a prepared statement.
The intent of the rules is to give account holders information that will allow them to make more informed retirement planning decisions, according to the DOL.
"Retirees 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," said Phyllis Borzi, assistant secretary of labor for Employee Benefits Security.
The DOL is seeking comments on the proposed rules by July 8, but federal agencies usually accept comment after the formal deadlines.
Comments may be submitted by e-mail to firstname.lastname@example.org with RIN 1210-AB20 in the subject line of the message or at www.regulations.gov. The proposed rules may be viewed at www.dol.gov/find/20130507/2013-10636.pdf.