ABC Urges No Mandate for Retirement Income Solutions

In testimony before the ERISA Advisory Council, Allison Klausner, assistant general counsel for Honeywell International, speaking on behalf of ABC, said specifically, the Department of Labor (DOL) should not mandate that employers sponsoring defined contribution plans provide additional information to participants (during active employment or retirement) about the economic value of a plan account if it were distributed in the form of a lifetime stream of income; include an in-plan investment vehicle whereby participants could invest in a lifetime stream of income product; or facilitate a distribution in the form of a lifetime stream of income.  

“While the Council’s companies strongly believe disclosure and education are the first steps toward appropriate use of lifetime income products, such disclosure should be encouraged, not mandated,” Klausner said.  

She also told the Advisory Council members that required inclusion of an annuity investment vehicle would create administrative complexities, challenging fiduciary obligations and new and increased plan fees and costs, which in turn would more likely than not be borne by plan participants. To mandate that a certain type of investment be included in a plan’s fund line-up is not appropriate, Klausner contended, pointing out that there is no mandate for defined contribution plans to include any other asset class.  

She said including an in-plan lifetime income distribution option is a plan design decision best left to each employer, as the position of employers varies, so there is not a “one size fits all” solution.