Translation Results Requested Through Conyac Made Public

With the continuing decline of the defined benefit plan system and the growth of the defined contribution plan system, increasing numbers of employees will be retiring with just an account balance under a 401(k) plan and/or an IRA. Aside from Social Security benefits, such employees will not have any source of guaranteed income for life.
If retirees draw down their retirement savings over their expected life expectancy, half of them will outlive their private retirement savings. With life expectancies continuing to increase, the risk of retirees outliving their retirement savings is one of the critical public policy challenges of the next decade in the retirement policy. The key issue is how to make employees aware of this risk and how to educate employees about lifetime income issues.The Act would require benefit statements to include the annuity equivalent of an employee’s benefit — a small step, but one that can make a significant difference in beginning to tackle the public policy challenge. Under present law, employees participating in DCplans, such as a 401(k) plan, are entitled to receive a benefit statement showing the balance in their account. With respect to plans that permit the employees to direct the investments in their account, these statements must be provided quarterly; where the employer directs the investments, the benefit statements can be provided annually. With respect to a DB plan, benefit statements are generally required to provide participants with certain information, including the participant’s total benefit and the participant’s vested benefit. Additionally, in the case of quarterly benefit statements, the statement is generally required to inform participants of how the benefit is invested; explain any restrictions on the participant’s right to control such investments; explain the importance of investment diversification; and direct the participants to a DL web providing information with respect to investing.Under the proposal, DB plans subject to ERISA would be required to include “annuity equivalents” on benefit statements provided to employees. An annuity equivalent would be the monthly annuity payment that would be made if the employee’s total account balance were used to buy a life annuity that commenced payments at the plan’s normal retirement age (generally 65). The statement would be required to show the monthly annuity payments under both a single life annuity and a qualified joint and survivor annuity The annuity equivalents would only be required to be provided once a year, even where quarterly statements are otherwise required. Thus, where quarterly statements are otherwise required, annuity equivalent need only be indexed on one such statement each year.