Retirement plan participants say they want their retirement benefit statements to include an estimate of lifetime income.
A study finds nine out of 10 participants want to see the estimate, which helps workers understand how much lifetime income could be generated from their retirement plans. The study by the Insured Retirement Institute (IRI) also reveals more than 90% of consumers want their employers to provide online retirement income calculators, allowing workers to select their own assumptions to calculate estimates of lifetime retirement income.
In light of its research, IRI believes the lifetime income estimates would improve participants’ understanding of their retirement plan options, leading to better decision making and improved savings. Cathy Weatherford, IRI president and CEO explains, “More than 75% of the plan participants who took part in this study said they would increase their contributions after seeing their retirement income estimates. And by no small margin. These respondents would increase their contribution level by four percentage points or more.”
In May 2013, the Department of Labor’s Employee Benefits Administration issued an Advance Notice of Proposed Rulemaking about requiring benefit statements to provide estimated lifetime income payments based on a plan participant’s accrued benefits and projected future accrue benefits. IRI states its support for the concept of providing lifetime income information, but also advises the DOL to provide plan sponsors with flexibility in providing the estimates, as different plan participants want different information about how much income their savings might generate.
The “Consumer Preferences for Lifetime Income Estimates on 401(k) Statements” survey was conducted with 1,500 401(k) plan participants between the ages of 21 and 65. The report is available here.
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