PLANSPONSOR - February - March 2022 - 12

UPFRONT
Income Projections Coming Soon
furnish quarterly benefit statements
to participants, must include the illustrations
on only one benefit statement
in any 12-month period. So plans that
issue quarterly statements must first
comply by using a benefit statement for
a quarter ending within 12 months of the
September 18, 2021, effective date.
" We expect that it's an important
framing for retirees and all DC participants
to think about their account balance
in terms of projected income, but it's also
going to lead to many emotions and needs
for further support, " says Josh Cohen,
head of DC client solutions at PGIM.
Three Likely Reactions
PGIM's research team surveyed 401(k)
participants to gauge their responses to
three income illustration scenarios and
how those reactions could affect their
behavior. The research considered earlycareer
savers who see low illustrations in
the first year of disclosures; early-career
savers who see modest but steady yearover-year
progress; and near-retirees who
see projected income that is higher than
actual income.
" It'll create a steep learning curve
for most participants out there, especially
because it will involve some pretty complex
calculations, " says David Morehead, vice
president, Retirement Benefits Group.
For younger participants who have yet
PLAN SPONSORS and advisers are
preparing for the introduction of lifetime
income estimates to defined contribution
plan statements this year. Anticipating
participants' reactions, they are adding
custom tools and advice for planning, as
well as investment menu evaluations.
In 2019's Setting Every Community
Up for Retirement Enhancement-or
SECURE-Act, Congress stipulated that
DC plans should provide retirement plan
12 PLANSPONSOR.COM February - March 2022
participants with projections illustrating
monthly retirement income amounts
generated from their accumulated retirement
savings. The Department of Labor's
interim final rule, published this past
September, requires that participants'
projected income be illustrated as an
account balance conversion to a lifetime
income annuity.
The law provides that participantdirected
plans, which are required to
Art by Dalbert Vilarino
to accumulate large balances, the projections
could be a wake-up call, as PGIM's
research showed that, overall, 68% of
participants' reactions were negative. The
survey also asked respondents if they will
be likely to act regarding their retirement
plans after seeing the numbers, and 70%
said yes. Among early-career savers, 50%
of responses were negative, and 78% said
they would be likely to act.
" The challenge with the methodology
that's going to be used is that it really
reflects assumptions that will underplay
what most people's retirement income will
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PLANSPONSOR - February - March 2022

Table of Contents for the Digital Edition of PLANSPONSOR - February - March 2022

INSIGHTS
INDUSTRY ANALYSIS
RULES & REGULATIONS
UPFRONT
Let’s Talk
Let It Grow
When Workers Retire in Stages
Virtual Lessons Learned
Managed Accounts, Today
How ‘Well’ Is ‘Well’ Enough?
Differentiation by Income
FIDUCIARY FORUM
INSIDE ANGLE
PLAN PROFILE
PLANSPONSOR - February - March 2022 - Cover1
PLANSPONSOR - February - March 2022 - Cover2
PLANSPONSOR - February - March 2022 - 1
PLANSPONSOR - February - March 2022 - INSIGHTS
PLANSPONSOR - February - March 2022 - 3
PLANSPONSOR - February - March 2022 - INDUSTRY ANALYSIS
PLANSPONSOR - February - March 2022 - 5
PLANSPONSOR - February - March 2022 - RULES & REGULATIONS
PLANSPONSOR - February - March 2022 - 7
PLANSPONSOR - February - March 2022 - 8
PLANSPONSOR - February - March 2022 - 9
PLANSPONSOR - February - March 2022 - UPFRONT
PLANSPONSOR - February - March 2022 - 11
PLANSPONSOR - February - March 2022 - 12
PLANSPONSOR - February - March 2022 - 13
PLANSPONSOR - February - March 2022 - 14
PLANSPONSOR - February - March 2022 - 15
PLANSPONSOR - February - March 2022 - 16
PLANSPONSOR - February - March 2022 - 17
PLANSPONSOR - February - March 2022 - Let’s Talk
PLANSPONSOR - February - March 2022 - 19
PLANSPONSOR - February - March 2022 - 20
PLANSPONSOR - February - March 2022 - 21
PLANSPONSOR - February - March 2022 - Let It Grow
PLANSPONSOR - February - March 2022 - 23
PLANSPONSOR - February - March 2022 - 24
PLANSPONSOR - February - March 2022 - 25
PLANSPONSOR - February - March 2022 - When Workers Retire in Stages
PLANSPONSOR - February - March 2022 - 27
PLANSPONSOR - February - March 2022 - 28
PLANSPONSOR - February - March 2022 - 29
PLANSPONSOR - February - March 2022 - Virtual Lessons Learned
PLANSPONSOR - February - March 2022 - 31
PLANSPONSOR - February - March 2022 - Managed Accounts, Today
PLANSPONSOR - February - March 2022 - 33
PLANSPONSOR - February - March 2022 - How ‘Well’ Is ‘Well’ Enough?
PLANSPONSOR - February - March 2022 - 35
PLANSPONSOR - February - March 2022 - Differentiation by Income
PLANSPONSOR - February - March 2022 - 37
PLANSPONSOR - February - March 2022 - FIDUCIARY FORUM
PLANSPONSOR - February - March 2022 - INSIDE ANGLE
PLANSPONSOR - February - March 2022 - PLAN PROFILE
PLANSPONSOR - February - March 2022 - Cover3
PLANSPONSOR - February - March 2022 - Cover4
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