Disclosure regarding lifetime income

(a)

In general

Subparagraph (B) of section 105(a)(2) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1025(a)(2)) is amended— (1)in clause (i), by striking and at the end; (2)in clause (ii), by striking diversification. and inserting diversification, and; and (3)by inserting at the end the following:

(iii)the lifetime income disclosure described in subparagraph (D)(i).

In the case of pension benefit statements described in clause (i) of paragraph (1)(A), a lifetime income disclosure under clause (iii) of this subparagraph shall only be required to be included in one pension benefit statement in each calendar year.

(b)

Lifetime income

Paragraph (2) of section 105(a) of such Act (29 U.S.C. 1025(a)) is amended by adding at the end the following new subparagraph:

(D)

Lifetime income disclosure

(i)

In general

(I)

Disclosure

A lifetime income disclosure shall set forth the annuity equivalent of the total benefits accrued with respect to the participant or beneficiary. (II)

Annuity equivalent of the total benefits accrued

For purposes of this subparagraph, the annuity equivalent of the total benefits accrued means the amount of monthly payments the participant or beneficiary would receive at the plan’s normal retirement age if the total accrued benefits of such participant or beneficiary were used on the date of the lifetime income disclosure to purchase the life annuities described in subclause (III), with payments under such annuities commencing at the plan’s normal retirement age. (III)

Life annuities

The life annuities described in this subclause are a qualified joint and survivor annuity (as defined in section 205(d)), based on assumptions specified in rules prescribed by the Secretary, including the assumption that the participant or beneficiary has a spouse of equal age, and a single life annuity. Such annuities may have a term certain or other features to the extent permitted under rules prescribed by the Secretary. (ii)

Model disclosure

Not later than 1 year after the date of the enactment of the Lifetime Income Disclosure Act, the Secretary shall issue a model lifetime income disclosure, written in a manner so as to be understood by the average plan participant, that— (I)explains that the annuity equivalent is only provided as an illustration; (II)explains that the actual annuity payments that may be purchased with the total benefits accrued will depend on numerous factors and may vary substantially from the annuity equivalent in the disclosures; (III)explains the assumptions upon which the annuity equivalent was determined; and (IV)provides such other similar explanations as the Secretary considers appropriate. (iii)

Assumptions and rules

Not later than 1 year after the date of the enactment of the Lifetime Income Disclosure Act, the Secretary shall— (I)prescribe assumptions that administrators of individual account plans may use in converting total accrued benefits into annuity equivalents for purposes of this subparagraph; and (II)issue interim final rules under clause (i).

In prescribing assumptions under subclause (I), the Secretary may prescribe a single set of specific assumptions (in which case the Secretary may issue tables or factors that facilitate such conversions), or ranges of permissible assumptions. To the extent that an accrued benefit is or may be invested in an annuity contract, the assumptions prescribed under subclause (I) shall, to the extent appropriate, permit administrators of individual account plans to use the amounts payable under such contract as an annuity equivalent.

(iv)

Limitation on liability

No plan fiduciary, plan sponsor, or other person shall have any liability under this title solely by reason of the provision of annuity equivalents which are derived in accordance with the assumptions and rules described in clause (iii) and which include the explanations contained in the model lifetime income disclosure described in clause (ii). This clause shall apply without regard to whether the provision of such annuity equivalent is required by subparagraph (B)(iii). (v)

Effective date

The requirement in subparagraph (B)(iii) shall apply to pension benefit statements furnished more than 12 months after the latest of the issuance by the Secretary of— (I)interim final rules under clause (i); (II)the model disclosure under clause (ii); or (III)the assumptions under clause (iii).