Though there’s consensus that the DOL’s proposal to express DC participants' account balance as a stream of income on their statements is a good idea, there’s widespread disparity on how to make the calculations.
The first question is whether to use the current or projected balance and then how to calculate the projected returns. There’s concern that participants will think the projections are guarantees, giving rise to fiduciary liability or unrealistic expectations.
The notice of the rule, published by the DOL in May, has drawn a significant number of comments from the industry, including NAPA/ASPPA, which suggested that:
• there should be three projections based on various rates of return; and
• investors should be sent to an online calculator to get more customized estimates.
The proposed rule is expected out early next year.
