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Thursday, August 8, 2013

ABA Urges Labor Dept. to Refrain from Regulatory Mandate

With baby boomers reaching retirement, the employee-benefit consulting industry has experienced growth and scrutiny by regulators. ABIA has worked closely with our parent organization, the ABA, on communicating with regulators on our members' efforts to help customers better plan for retirement.

The Department of Labor (DOL) has proposed a mandate on 401(k) disclosure statements and in response the ABA sent a comment letter to the DOL expressing our position that the proposed mandate is unnecessary and premature. Instead, the department should allow for the continued development of industry standards for financial disclosures that would permit plan participants to manage effectively their retirement savings.

In an advance notice of proposed rulemaking, DOL proposed requiring pension statements to include an estimated lifetime payment stream based on a potential retirement date. ABA shares the department’s goal of providing “participants with useful information that will encourage them to monitor and manage more actively their financial goals for retirement,” the association said, but it expressed concern that the proposal, in its current form, “would result in increased costs in plan administration while falling short of achieving active participant involvement in retirement planning.”

Instead, ABA recommended that DOL generate its own savings income chart, which would allow participants to estimate current and projected savings amounts in a retirement savings plan, which
ABA said could foster the “investor education and participant initiative [that] is the best way to modify retirement savings habits.”

If DOL were to proceed following an advance NPR, it would issue a formal NPR, which would trigger a new cycle of comments and review.

Read the letter.