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Guidance on lifetime income from the Department of Labor's Employee Benefits Security Administration is at the Office of Management and Budget and could be released soon, Phyllis C. Borzi, assistant secretary of labor for EBSA, told the ERISA Advisory Council March 1.
When the retirement community was asked what a lifetime income illustration should look like, commenters were split between two ways of illustrating lifetime income: a snapshot of what a plan participant's current Section 401(k) balances would give that person throughout retirement and a projection of what a participant's balance would be when he or she reached retirement, Borzi said.
Because of this lack of consensus, the department decided to more closely examine “this question of the lifetime income illustration and really solicit some more comments on it,” Borzi said.
“This proposal will basically set out an approach and ask people for comments. Then we'll take the comments and figure out what we want to do. So hopefully, it'll be out very soon,” she said.
Borzi said DOL is working on a letter to the council addressing the recommendations made in November on the topics of beneficiary designation, managing disability risks, and income replacement in retirement (228 PBD, 11/29/12; 39 BPR 2287, 12/4/12).
“One of the bits of feedback that we've gotten is that the councils deliver their reports and then we never hear anything about them again. So what we're working on now is a letter to the council that addresses some of the recommendations” given by the council, Borzi said.
In the area of beneficiary designations, “one of the recommendations was that we should expand our guidance on beneficiary designations, and … we think that's a terrific idea,” Borzi said. DOL is planning to begin work on a checklist for plan administrators that would help streamline the beneficiary designation process, she said.
The council's recommendations on managing disability risks included one that DOL review its current claims regulations on disability benefits, and Borzi said the department “couldn't agree with you more.”
“If you look at the regulatory agenda that came out a couple of months ago, you will see this project under long-term action, but we want you to know that, as our near-term actions move along, … we're going to begin to dedicate some resources to this,” Borzi said.
The council also recommended that DOL develop educational materials regarding income replacement options in retirement, and Borzi said DOL will look to incorporate this recommendation into its project on lifetime income.
Borzi said DOL hopes to post the 2012 ERISA Advisory Council reports on its website soon.
During the meeting, the ERISA Advisory Council settled on the three topics on which it will provide reports to DOL at the end of the year.
The council intends to study and discuss the following topics:
• missing and lost participants;
• pension buyouts, plan “de-risking,” and choice of lump-sum payment from a defined benefit plan; and
• how to tailor education and communications to different segments.
The council will hold its first sets of hearings on these issues June 4-6.
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