The DOL is considering requiring DC plan providers to provide participants with retirement income projections based on their current balances. Specifically, the guidance would require that “an individual benefit statement should and could present a participant’s accrued benefits in a defined contribution plan (i.e., the individual’s account balance) as a lifetime income stream of payments in addition to presenting the benefits as an account balance.”
Industry guru Fred Reish thinks these changes would have a positive and significant impact on the industry, since participants would have a better idea of how close (or far away) they are to retirement security. With benchmarks that estimate how much income their account balance can replace and a gap analysis, participants may be more willing to take action. But will the ones who are too far away from their goals get discouraged? Reality is hard to face sometimes — but that doesn’t mean we should keep sleeping.
