The Department of Labor (DOL) is expected to announce in mid-March whether it will start requiring ERISA-governed defined contribution plans to provide participants with retirement income projections. “As part of this initiative, the department will explore whether, and how, an individual benefit statement should and could present a participant’s accrued benefits in a defined contribution plan as a lifetime income stream of payments in addition to presenting the benefits as an account balance,” the DOL said.

According to the DOL, individual account plans that permit participant direction would have to provide the pension benefit statement quarterly and individual account plans that do not permit participant direction would have to provide an annual statement.

The purpose of the income projection requirement would be to shift plan sponsors’ and participants’ focus from account accrual to income generation. By offering a retirement income projection, plan participants would be able to determine whether they were saving enough to secure a comfortable retirement.

If the DOL institutes the mandate, then recordkeepers and advisers would likely step in to provide the retirement income benchmarks as well as information about how much plan participants need to save in order to reach their objectives.

Please contact your ABG representative to discuss the mandate as well as tools for encouraging plan participants to meet their retirement savings goals.