New Senate Bill re: Income Projections in 401(k) Plans

Global Pensions

US – A bill introduced into the US Senate yesterday will require 401(k) providers to inform participants of the monthly income they can expect in retirement. The bi-partisan bill, the Lifetime Income Disclosure Act, was introduced by democratic senators Jeff Bingaman and Herb Kohl, and republican senator Johnny Isakson.

The bill would require the projection to be based on the participant's current balance and is modelled on the Social Security Administration's annual statements, which provides a projected income based on current earnings. Bingaman said: "It is estimated that half of American households will lack sufficient retirement income to maintain their pre-retirement standard of living. Yet many Americans are unaware of their financial vulnerability. Our bill is a common-sense approach to empowering Americans, and helping them determine whether they are on a path to a secure retirement." Lobbying and interest group AARP supports the measure. The non-governmental group represents the needs of Americans over the age of 50.

AARP executive vice president Nancy LeaMond said: "AARP believes the Lifetime Income Disclosure Act will improve an individual's understanding of the retirement income produced from their 401(k) accounts, leading to more informed decision making about retirement needs."