Arent Fox Partner William Charyk Discusses Lifetime Income Illustrations
Arent Fox ERISA partner William R. Charyk was quoted in multiple publications — including Human Resource Executive, BenefitsLink Retirement Plans, and Plan Sponsor — on the issue of mandating lifetime income illustrations. Mr. Charyk, who is president of the Institutional Retirement Income Council (IRIC), a non-profit think tank, explained that his organization has recommended to the Department of Labor (DOL) that lifetime income illustrations be mandated as part of participant statements.
“Given the risks [defined contribution] plan participants face, including a lack of understanding of how much they need for retirement, how long their funds will need to last and how to spend the funds when they do retire, it is imperative that participants receive this information,” said Mr. Charyk to Human Resource Executive. “To make the disclosures voluntary would be seriously detrimental to them.”
According to the BenefitsLink article, the comment letter from the IRIC is in response to the DOL’s advance notice of proposed rulemaking that focuses on lifetime income illustrations. These illustrations are given to participants in defined contribution plans, including 401(k) plans. The proposed rules would require that a participant’s benefits statements include the projected account balance at the participant’s retirement age, as well as an estimated lifetime income stream. The benefit statement would also contain a disclaimer that projections are only estimates and not guarantees.
“Overall, IRIC agrees with the concepts set out in the proposal. Our members believe in and promote the concept that defined contribution plans, including 401(k) plans, need to become distribution vehicles and not merely savings vehicles,” said Mr. Charyk to Plan Sponsor. “As a result, we strongly embrace the concept of providing plan participants with meaningful illustrations of the income that retirement savings will generate once they terminate employment.”
To read the article from Human Resource Executive, click here. To read the article from BenefitsLink Retirement Plans, click here (subscription required). And to read the article from Plan Sponsor, click here.