The Employee Benefits Security Administration (the “EBSA”) has made available on its website a Fact Sheet discussing the request for information (the “RFI”) that the EBSA, along with the Treasury Department, has issued asking for ideas on providing lifetime income and similar annuity arrangements in defined contribution plans.
The problem, according to the Fact Sheet, is that an increasing number of employees are looking to their employer-sponsored defined contribution plan for their retirement security, but at the same time take their entire retirement benefit from that plan in the form of a lump sum distribution. This increases the risk of not having adequate retirement income. One possible solution is to facilitate access, under the defined contribution plan, to lifetime income or similar annuity options which provide a lifetime stream of income after retirement.
The RFI, issued on February 2, 2010, explores whether and how to enhance retirement security by making lifetime income and annuity options available in a defined contribution plan, and asks 39 specific questions to help the EBSA determine what, if anything, the next steps should be.