While the U.S. may be a leader in helping people in DC plans accumulate assets, the investigative office of Congress believes that we can learn a lot from the rest of the world about how to help workers spend down more wisely in retirement. Citing examples from Australia, Canada, Chile, Singapore, Switzerland and the UK, a recent report from Congress’ Government Accountability Office recommends that federal agencies do more to provide employees with options other than lump sum payments, including annuities and other spend-down alternatives. The GAO report also encourages regulators to adopt measures to translate account balances into streams of income and to offer retirement calculators.
Though the DOL announced plans to require participant account balances to be expressed in terms of monthly income projections this past summer, many plan sponsors are waiting on the sidelines for more guidance on retirement income — and perhaps protection from the DOL.
Meanwhile, some companies like UTC are creating sophisticated, flexible and low-cost retirement income options to help workers who have to rely on their DC savings, not a DB plan, in retirement. The UTC model is explored in the recently released winter issue of NAPA Net the Magazine, in our cover story on the top 10 DC innovators.
