Bipartisan legislation was introduced today in the Senate and House of Representatives that would require employers to provide 401(k) participants with a projection of monthly income at retirement, based on their current account balance.
Johnny Isakson, R-Ga., and Chris Murphy, D-Conn., introduced the Lifetime Income Disclosure Act, or S. 868, in the Senate. Luke Messer, R-Ind., and Mark Pocan, D-Wisc., introduced a companion measure in the House.
"American workers need access to the best available information about their investment choices and exactly how much they will have earned when they retire," Sen. Isakson said. "This information not only helps them to plan, but promotes increased savings while they are still working."
The new Senate and House measures are reintroductions of bills that had been put forth in the prior session of Congress (H.R. 2317 and S. 1317, respectively). Both bills didn't make it through committee.
The legislation builds on the federal government's push to frame Americans' thinking around retirement savings in terms of generating a retirement income stream, similar to that provided by a pension plan, rather than wealth accumulation.
A bill that unanimously passed the Senate Finance Committee late last year — the Retirement Enhancement and Savings Act — contained a similar provision calling for annual participant benefit statements to include income disclosures.
Department of Labor officials had also pursued a regulatory project for years, but Phyllis Borzi, assistant secretary of labor during the Obama administration, said last year the administration had run out of time before a new presidential administration swept into office.
The Treasury Department in 2014 also issued guidance approving use of 401(k) assets to purchase certain longevity annuities. That same year, it also issued guidance to encourage bundling of deferred income annuities into target-date funds.