WASHINGTON, D.C. – The Insured Retirement Institute (IRI) today released a new study revealing that the overwhelming majority of consumers want their retirement benefit statements to provide an estimate of lifetime income. According to the study, nine in 10 retirement plan participants said they want their 401(k) statements to include these estimates, which are designed to help workers understand how much lifetime income could be generated from their retirement plans. The research was commissioned by IRI to support the Department of Labor’s (DOL) efforts during its rulemaking process for including lifetime income illustrations on benefit statements.
“Not only would these estimates be helpful to plan participants, but our research demonstrates that they would lead to improved savings,” IRI President and CEO Cathy Weatherford said. “More than 75 percent of the plan participants who took part in this study said they would increase their contributions after seeing their retirement income estimates. And by no small margin. These respondents would increase their contribution level by four percentage points or more. This confirms our belief that lifetime income estimates would improve Americans’ understanding of their retirement plan options and lead to better decision making.”
The DOL’s Employee Benefits Security Administration issued an Advance Notice of Proposed Rulemaking in May 2013 to require benefit statements to provide estimated lifetime income payments based on a plan participant’s accrued benefits and projected future accrued benefits. In a comment letter submitted in response to the DOL’s advance notice, IRI said it strongly supports the concept of providing lifetime income illustrations on participant benefit statements, but urged the DOL to provide plan sponsors with flexibility in providing the estimates. Pursuing lifetime income estimates for American workers remains part of IRI’s advocacy agenda in 2015. The DOL aims to propose a rule in July 2015, according to its fall 2014 regulatory agenda.
Other key findings from the report:
· More than 90 percent of survey respondents believe lifetime retirement income estimates are helpful in preparing for retirement.
· More than 90 percent of survey respondents want their employers to provide online retirement income calculators so workers can select their own assumptions to calculate estimates of lifetime retirement income.
· The survey found no overwhelming preference as to whether lifetime income estimates should be based on current account balances or projected account balances.
Click here for the entire report, “Consumer Preferences for Lifetime Income Estimates on 401(k) Statements.”
About the Insured Retirement Institute: The Insured Retirement Institute (IRI) is the leading association for the retirement income industry. IRI proudly leads a national consumer coalition of more than 20 organizations, and is the only association that represents the entire supply chain of insured retirement strategies. IRI members are the major insurers, asset managers, broker-dealers/distributors, and 150,000 financial professionals. As a not-for-profit organization, IRI provides an objective forum for communication and education, and advocates for the sustainable retirement solutions Americans need to help achieve a secure and dignified retirement. Learn more at www.irionline.org.