Employee Benefits Security Administration 

Attn: Lifetime Income Joint Hearing 

Room N-5655 

U.S. Department of Labor 

200 Constitution Avenue, NW. 

Washington, DC 20210 

August 16, 2010 

On behalf of the National Women’s Law Center and the Pension Rights Center, the 

undersigned respectfully request to testify at the Lifetime Income Joint Hearing to be 

held on September 14, and if necessary, on September 15, 2010. 

The undersigned propose to testify on the following topics: 

1. Certain Specific Participant Concerns Affecting the Choice of Lifetime Income 

Relative to Other Options. 

• Participants, and particularly women, may have concerns regarding the 

pricing of lifetime income options, given the high cost of annuity products on 

the open market. Lifetime income options offered through employersponsored DC plans would be required to offer gender-neutral pricing, and 

would likely be lower-priced than annuities offered on the open market given 

that employer-based retirement savings plans may be able to negotiate lower 

fees overall, premised on a group rate and that, as increasing numbers of 

participants in employer-sponsored plans select annuities, costs (and risk) 

could be spread out and the price of annuities would drop further. (2 minutes) 

• Participants, and particularly low- and moderate-income participants, may be 

concerned that their entire account balance would be “locked” into a lifetime 

income product. However, participants could be given the option of receiving 

his or her account balance (or portion of the account balance) amount as an 

annuity, so long as the amount to be annuitized at least equals some minimum 

threshold. (2 minutes) 

• Conversely, some participants may be concerned that they would not be able 

to use the retirement savings accumulated over their career to maximize the 

lifetime income received. We therefore recommend that the Secretaries of 

Labor and Treasury consider requiring plan administrators to accept rollovers 

from other qualified retirement accounts, to give low- and moderate-income 

workers an opportunity to receive larger lifetime income payments. (2 

minutes) 

3. Disclosure of Account Balances as Monthly Income Streams. 

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• Although workers understand that traditional DB pensions provide a lifetime 

income stream, few workers conceptualize their DC plan balances in terms of 

a potential lifetime stream of income. Consequently, lifetime income options 

should be offered in conjunction with significant educational efforts for plan 

participants. For example, the Lifetime Income Disclosure Act (S. 2832), 

introduced in 2009 by Senators Bingaman, Isakson and Kohl, would require 

401(k) plans to inform participants of the projected monthly retirement 

income they could purchase, based on their existing 401(k) account balance. 

While the bill does not mandate or even facilitate the purchase of annuities 

through DC plans, it would afford participants personalized information about 

the purchasing power of their retirement savings. This would enable plan 

participants to better plan for retirement, by raising awareness of the need for 

secure lifetime income in retirement and helping them understand in a 

concrete way what income they could receive from their savings. (5 minutes) 

5. Alternative Designs of In-Plan and Distribution Lifetime Income Options. 

• Some groups have recommended amending the qualified joint and survivor 

annuity (QJSA) rules, which provide important spousal protections, to lifetime 

income options offered through employer-sponsored DC plans, asserting that 

this would encourage employers to offer annuity options by reducing costs 

and/or limiting employers' fiduciary liabilities. But some proposals would 

effectively eliminate the spousal protections that apply under current law to 

annuities offered under DC plans. And spousal protections are vital to women, 

who are more likely than men to rely on their spouses' retirement benefits. In 

contrast, it is unclear whether weakening the QJSA rules would in fact induce 

more plans to offer lifetime income options (since at least one association of 

investment companies has stated that the reason that plan sponsors do not 

offer annuities is not the QJSA requirements but low demand from 

participants). (5 minutes) 

The undersigned respectfully request to testify to address these issues, as well as any 

others that may be of assistance to the Departments of Labor and Treasury. Please 

contact either of us should you have any questions. 

Sincerely, 

Rebecca Davis 

Legislative Counsel 

Pension Rights Center 

rdavis@pensionrights.org

(202) 296-3776 

Amy Matsui 

Senior Counsel 

National Women’s Law Center 

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amatsui@nwlc.org

(202) 588-7615 

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