Study: Bill will help workers better plan their financial futures
May 15, 2015 — WASHINGTON, D.C. – The Insured Retirement Institute (IRI) released the following statement from IRI President and CEO Cathy Weatherford after the Lifetime Income Disclosure Act was introduced this week in the House and yesterday in the Senate.
The bipartisan legislation would require employer-sponsored retirement plans to provide participants with an estimate of how much lifetime income can be generated in retirement from a worker’s savings.
“American workers today are faced with the increasingly difficult task of making a lifetime of savings last throughout all their retirement years. Showing workers how much monthly income their savings may generate in retirement will provide workers with a better understanding of their savings options and help them to plan for their future financial security. As such, we strongly support policy initiatives, such as the Lifetime Income Disclosure Act, that lead to more informed financial decision making. Our research shows that nine in 10 workers want this information on their benefit statements and find the information helpful in planning for their future financial security. Additionally more than 75 percent of plan participants in our study said they would increase their plan contributions by four percentage points or more after seeing lifetime income estimates. This confirms our belief that these estimates would promote better savings habits. We thank Congressman Luke Messer (R-Ind.), Congressman Mark Pocan (D-Wis.), Senator Johnny Isakson (R-Ga.), and Senator Christopher Murphy (D-Conn.) for their leadership on this issue, and we urge all Members of Congress to support this legislation.”
IRI’s research, “Consumer Preferences for Lifetime Income Estimates on 401(k) Statements,” is based on interviews conducted by Woelfel Research with 1,500 respondents. Respondents were between the ages of 21 and 65, and currently have a 401(k) balance. Interviews were conducted in September 2014. Click here to view the legislation text.
Excerpt from the House Bill:
- MODEL DISCLOSURE—Not later than 1 year after the date of the enact- ment of the Lifetime Income Disclosure Act, the Secretary shall issue a model life-time income disclosure, written in a manner so as to be understood by the average plan participant, that—
‘‘(I) explains that the lifetime income stream equivalent is only provided as an illustration;
‘‘(II) explains that the actual payments under the lifetime income stream described in clause (i)(III) that may be purchased with the total benefits accrued will depend on numerous factors and may vary substantially from the lifetime income stream equivalent in the disclosures;
‘‘(III) explains the assumptions upon which the lifetime income stream equivalent was determined; and
‘‘(IV) provides such other similar explanations as the Secretary considers appropriate.
Click here to view the legislation text
Click here to view the IRI study.
About the Insured Retirement Institute
The Insured Retirement Institute (IRI) is the leading association for the retirement income industry. IRI proudly leads a national consumer coalition of more than 30 organizations, and is the only association that represents the entire supply chain of insured retirement strategies. IRI members are the major insurers, asset managers, broker-dealers/distributors, and 150,000 financial professionals. As a not-for-profit organization, IRI provides an objective forum for communication and education, and advocates for the sustainable retirement solutions Americans need to help achieve a secure and dignified retirement. Learn more at www.irionline.org.