The vast majority of Americans believe they will benefit from lifetime income illustrations on their retirement plan benefit statements, according to the Employee Benefit Research Institute.
In its 2014 Retirement Confidence Survey, EBRI asked if those who participate in an employer-sponsored defined contribution plan would find lifetime income illustrations useful.
EBRI found that 1 in 3 of the respondents thought it was very useful to hear an estimate of the monthly retirement income they might expect from their plan and another 49 percent thought it was somewhat useful.
Seventeen percent of the respondents said that this information would motivate them to increase the amount of money they were contributing to their defined contribution retirement plans. Of those who responded that their illustrated value was much less or somewhat less than expected, 35 percent said they would increase their contributions, according to EBRI.
The Department of Labor published an advanced notice of proposed rulemaking in May 2013 that DC plan sponsors include illustrations on participant account statements that showed not only their current retirement account balance but what their projected account balance would be at normal retirement age.
Many plan providers have spoken out against this idea because the market is flush with retirement income calculators, many of which are more robust than what the Department of Labor has devised. They also have spoken out against the lack of flexibility in the DOL’s proposal, which they believe should allow plan sponsors to address these issues on a voluntary basis and in the manner that is most appropriate for their plan participants.