PLANSPONSOR - February - March 2022 - 13

likely be, because the projection doesn't
consider the future contributions someone
might make, or the person's future earnings, "
says Amy Reynolds, a partner in
Mercer. " Therefore, it won't look sufficient
from the perspective of most participants,
and the issue for most sponsors
and recordkeepers is really that they've
been providing information, historically,
through the recordkeepers. They've also
been modeling tools and other services
to help participants model and estimate
retirement income while considering
some of these projections and changes.
" That's really the challenge, " she
continues, " to help people reconcile what
they see on these statements versus what
they've probably seen on the websites
they've historically been accessing. "
In the PGIM survey, near-retirees
were presented with a hypothetical
scenario in which the participants had
accumulated $200,000 of savings in a
DC plan. These savers then received statements
indicating that that amount will
generate $966 in monthly retirement
income, payable for life; however, under
the actual, non-annuitized figure that
assumes a yearly 4% withdrawal, monthly
payments will be only $666.
Older participants and near-retirees
receiving the projected disclosures are
apt to see income amounts that are higher
than their actual incomes will be. That is
because the mandated DOL calculation
method assumes that the participant's
full balance has been annuitized.
" The reason it is less is that financial
experts suggest withdrawing only 4% of
your initial retirement balance annually
if you wish to retain access to your assets
and have a good chance of not running
out of money in retirement, " PGIM
research states. " The amount communicated
in your statements was based on
annuitizing your full account balance. "
Support for Participants
Expecting to encounter participant questions,
many plan sponsors and advisers
have been preparing tools, educational
sessions and customized advice targeted
to specific cohorts, sources say.
Jeff Cimini, head of institutional
product at Voya Financial, says that recordkeepers-along
with the DOL-will send
participants supplemental projection
information that includes lifetime income
projections based on future contributions,
earnings and investment returns.
" The regulations that the DOL put
forth allow for an additional projection,
a supplemental projection, which allows
recordkeepers to continue doing what we
did in the past, which is to make assumptions
about the future that can help participants
understand if they continue their
behavior, what their retirement can look
like, " Cimini says.
Voya focuses on its support efforts,
plus outreach and education to help
TIDBITS
Bitcoin as a Retirement Plan
Investment?
60% of employees and
financial professionals
surveyed responded
that they would like to
see digital asset options
such as Bitcoin added
to their employer plan.
50%-plus financial
professionals surveyed
expressed confidence
in cryptocurrency as a
short-term strategy but
were less bullish on its
long-term prospects.
Respondents who
invest in digital assets
in their retirement
portfolio expect to retire
eight to 13 years earlier
than those who don't
invest in them.
50%-plus Generation
Zers and Millennials
surveyed take advantage
of alternative
currencies as an investment
tool within their
retirement account.
Source: Capitalize, " Retiring With Crypto: Are Digital Assets a Part of Your Retirement Portfolio? "
sponsors manage participant reactions,
he says. " We need to make sure the
advisers, the recordkeepers, and those
who work with participants are aware of
the methodology, so that, when participants
have questions, we give them good
answers for why the DOL projection is
on their statement and how the supplemental
projection ties to that. And then
we have counselors ready to talk to participants
who have questions about 'How
can I improve my outcome?' "
Cohen says, " When we look at a typical
plan menu, versus what's needed for retirement
income, most are short on options
such as additional fixed-income options,
longer duration, more inflation-sensitive
asset classes and income-producing asset
classes. It's bringing more of those types
of options into the menu. " -Noah Zuss
PLANSPONSOR.COM February - March 2022 13

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