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Numerous presenters at the two-day Washington, D.C., session sponsored jointly by the U.S Departments of Labor (DoL) and Treasury insisted that sponsors were concerned that, without detailed regulatory guidance, their eventual choice of a lifetime income option provider and their educational efforts could well land them in fiduciary hot water under the Employee Retirement Income Security Act (ERISA). So, because provider selection and education will be more complex than in other retirement plan service areas, a number of the witnesses requested that the DoL’s Employee Benefits Security Administration (EBSA) and Treasury officials consider a variety of safe harbor protections. “Under current law, the selection of an annuity provider is fraught with potential missteps that could result in continued liability for the plan sponsor well into the future,” said Janet Boyd, Director of Government Relations for The Dow Chemical Company, who appeared on behalf of the American Benefits Council. “To rectify this, plan sponsors need clear, simple fiduciary guidance allowing them to make lifetime income options available to plan participants without risking a significant increase in potential fiduciary liability.” Most witnesses started by agreeing that a strong and comprehensive participant education effort would have to be mounted for a lifetime income option to be effective – or to be accepted at all. “The individual comments in response to the (agencies request for information) RFI overwhelmingly expressed a lack of trust in service providers, employers/ plan sponsors, and the government as an administrator of lifetime income benefits,” declared Rebecca Davis, who offered testimony on behalf of the Pension Rights Center. “We believe that their fears are best addressed by ensuring that any implementation of a required annuity option in 401(k)-type plans be accompanied by a large public education campaign. The comments demonstrate a lack of understanding of the value of a lifetime stream of income.” “It is our belief that these products often need to be sold to participants and clear education and communication is critical,” agreed Martin Schmidt, Chairman, Institutional Retirement Income Council, in his testimony.
Numerous presenters at the two-day Washington, D.C., session sponsored jointly by the U.S Departments of Labor (DoL) and Treasury insisted that sponsors were concerned that, without detailed regulatory guidance, their eventual choice of a lifetime income option provider and their educational efforts could well land them in fiduciary hot water under the Employee Retirement Income Security Act (ERISA).
So, because provider selection and education will be more complex than in other retirement plan service areas, a number of the witnesses requested that the DoL’s Employee Benefits Security Administration (EBSA) and Treasury officials consider a variety of safe harbor protections.
“Under current law, the selection of an annuity provider is fraught with potential missteps that could result in continued liability for the plan sponsor well into the future,” said Janet Boyd, Director of Government Relations for The Dow Chemical Company, who appeared on behalf of the American Benefits Council. “To rectify this, plan sponsors need clear, simple fiduciary guidance allowing them to make lifetime income options available to plan participants without risking a significant increase in potential fiduciary liability.”
Most witnesses started by agreeing that a strong and comprehensive participant education effort would have to be mounted for a lifetime income option to be effective – or to be accepted at all.
“The individual comments in response to the (agencies request for information) RFI overwhelmingly expressed a lack of trust in service providers, employers/ plan sponsors, and the government as an administrator of lifetime income benefits,” declared Rebecca Davis, who offered testimony on behalf of the Pension Rights Center. “We believe that their fears are best addressed by ensuring that any implementation of a required annuity option in 401(k)-type plans be accompanied by a large public education campaign. The comments demonstrate a lack of understanding of the value of a lifetime stream of income.”
“It is our belief that these products often need to be sold to participants and clear education and communication is critical,” agreed Martin Schmidt, Chairman, Institutional Retirement Income Council, in his testimony.
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