Administering Employee Benefits
Senate Committee to Hold Hearing on Lifetime Income and 401(k)s
Kiplinger News
June 14, 2010
The Senate Special Committee on Aging will hold a hearing June 16 to discuss the development of lifetime-income strategies for Americans with workplace-sponsored retirement plans.
Decades ago, a majority of people had defined-benefit (pension) plans through their employers. According to Boston College's Center for Retirement Research, 62 percent of workers had DB plans in 1983 - but only 17 percent did by 2007. With large companies abandoning their DB programs in a bid to save money, Americans are relying more on defined-contribution plans like 401(k)s.
While 401(k) plans make saving for retirement easier - particularly if an employer offers contribution matching - they leave people on their own in retirement. Some plans attempt to address that problem by design, Bloomberg reported recently: Certain retirement accounts include annuities, while others use target-date strategies to emphasize income generation as the accountholder ages.
At its hearing, the Senate Aging Committee will consider encouraging employers to offer annuities in their 401(k) plans. Another bill, introduced last year, would force corporate plan sponsors to reveal how much monthly income their plans will provide in retirement.
Widespread enrollment in retirement-savings accounts is seen as critical to Americans' well-being. The White House has emphasized that workplace-sponsored savings plans are essential - and the Senate may soon require that those plans provide for people's income needs after they've stopped working.
