Earlier this week, the Employee Benefit Security Administration (EBSA) of the Department of Labor (DOL) released three items related lifetime income illustrations for benefit statements for defined-contribution plan individuals. I know, that is clearly a mouthful. For background, the Pension Protection Act of 2006 (PPA) established a requirement for annual benefit statements from qualified retirement plans.
All these years later, we have no idea how to do the required lifetime income illustrations. The ANPR tells us that any create of assumptions that we use that employ generally accepted investment theory is going to be considered reasonable. EBSA provided us safe harbor assumptions also. When push comes to shove, we expect that most sponsors (or their vendors), after the regulations become effective, will opt for simplicity and use the DOL’s safe harbor assumptions.
- Retail Me Not (Online Coupons)
- You pay the loan back again to yourself
- Reliable Returns
- After 6 months we gather 62.5/year times .5 year = 31.25. We’ve 125 + 31.25 = 156.25
- Publishing Dashboards
- Get CASH RETURN From your Stuff You Buy Anyway
- Grouping the info one fourth/ month wise
What are they, you ask? Let’s start at the top. For people who stay in the workforce consistently until retirement, the 3% annual upsurge in contributions is most likely as realistic as anything else. But, very few people stay in the workforce consistently anymore. There are all of maternity leave, paternity leave, layoffs, reductions-in-force, and then there are the companies that freeze pay or cut benefits making the 3% annual increase assumption a bit lofty. Think about investment returns of 7% per yr combined with a 3% discount rate?
That’s a 4% real rate of come back, net of expenses. Did anyone watch the Frontline special on PBS letting you know how your accounts amounts are eroded by expenditures? If you did, I wager you do not think a 4% real rate of comeback is fair. I see several final results out of this exercise.
Some will complain. Some will jump dispatch. What can a company do? A company can say that the total result is fine and move ahead as though nothing at all occurred. Or, an employer can decide paternalistically it has some responsibility here and revisit retirement design. Perhaps the answer is that old dinosaur, defined benefit. The answer is another old dinosaur Perhaps, profit sharing. Either way, both have far more flexibility in design than do 401(k) programs. The DOL needs intelligent comments on this one. It is hoped by me gets them.
25 billion over the baseline, offsetting some of the cost of the stimulus. 18 billion over another decade. Looking over much longer horizons would, of course, increase this world wide web cost. 100 billion cost. As time passes, as the economy grows, the excess interest payments will fall in accordance with the economy’s size: in this example, additional annual interest costs would fall to 0 just.01% of GDP after 10 years. 18 billion increase in interest costs over the decade.
