Advisory Council Considering Lifetime Participation Notices

The purpose of the meeting is to study model notices and plan sponsor education about lifetime plan participation and disclosures for pension risk transfers.

A 2015 ERISA Advisory Council meeting notice from DOL explains that the 2014 Council found “there are numerous considerations participants should weigh when deciding what actions to take with their accumulated retirement savings upon termination of employment at job change or retirement. In making these decisions, participants certainly would benefit from objective, timely information.” The Council heard that many plan sponsors would like to provide balanced information to their employees to help them make informed decisions, yet there is uncertainty as to what is permissible for them to communicate. To that end, the Council felt that the DOL can assume an important role in communicating clear, concise and objective information in this area.

The 2015 Council intends to provide the DOL sample participant model notices/communications for its consideration.

The Council would like to hear recommendations related to the drafting of model notices concerning lifetime participation in Employee Retirement Income Security Act (ERISA) plans. Some of the questions that the Council will explore include:

• What information should be included in such notices?
• At what points in one’s career should notices be provided?
• If provided at multiple times in a participant’s career, should notices differ in message and content?
• In what format should notices be delivered?
• What mediums of communication should be considered beyond model notices?
• How long should notices be?
• Should notices be personalized for the individual? If so, what elements should be in the notices and what challenges does this pose from a data perspective?
• How should these notices coordinate with other required or supplemental communications a participant receives?

The Council would also like to hear recommendations related to outreach materials the DOL can provide to plan sponsors about the topic of innovative plan features that may encourage lifetime participation.

• What format should be used? FAQ? Tip sheet? Case studies? Other?
• What plan features should be highlighted?
• How should the DOL balance the desire to communicate innovative ideas without specifically endorsing any specific feature?

The 2015 ERISA Advisory Council notice also explains that the 2013 Council conducted a comprehensive study of the defined benefit plan risk transfer process. The 2013 Council report included, among other things, recommendations regarding the information needed by plan participants involved in risk transfer transactions. For lump-sum risk transfers, the 2013 Council recommended lump-sum election windows be limited to no less than 90 days, and that disclosures should include “relevant information to enable a participant to make an informed election,” including the potential impact of tax penalties, whether an early retirement subsidy is included in the lump sum, and a comparison of the lump sum to other benefits under the plan.

The 2015 Council will supplement the work of the 2013 Council by focusing specifically on the information that participants need to make informed decisions when faced with lump-sum risk transfers and insurance annuity risk transfers, and best practices for plan sponsors in communicating that information. More information is here.  

Organizations or members of the public wishing to submit a written statement may do so by submitting 30 copies on or before May 20, 2015. Statements deemed relevant by the Advisory Council and received on or before May 20 will be included in the record of the meeting and made available through the DOL’s Employee Benefits Security Administration (EBSA) Public Disclosure Room, along with witness statements. Information about how to submit statements is here.