Retirement Statements are Changing: What to Expect

Monday, November 15, 2021 | By Chris Robino

Retirement Statements are Changing: What to Expect

The SECURE Act brought many changes to the retirement industry, including the requirement that plan administrators provide illustrations of a participant’s account balance converted to a lifetime income equivalent. The illustrations must be included at least annually, and plan administrators must use a 10-year constant maturity Treasury rate to calculate monthly payments.

The Department of Labor provided guidance (known as an Interim Final Rule) explaining how to calculate the lifetime income illustrations— specifically laying out the assumptions and other factors that plan administrators must use for calculating the estimated lifetime income stream, which SS&C is using to update the statements we provide accordingly. Our updates will be completed in advance of the regulatory deadline, and clients should expect to see those changes on statements dated no later than Q2 2022.

These new statements will show monthly income projections, which provide participants and shareholders with information about how much monthly income may be expected upon retirement based on their current account balance. The projection is required to be shown as a single-life annuity and as a qualified joint and survivor annuity.

The assumptions that must be used to calculate the required projections include

  • Age and commencement date – The IFR indicates that the projections will assume the participant's age as 67 (unless they are older, in which case the actual age will be used) and the annuity commencement date will be assumed to be the final day of the applicable statement period.
  • Marital status – The projections must assume the participant is married and provide an illustration shown as a single-life annuity and 100% Qualified Joint Survivor Annuity.
  • Interest rate – Plan Sponsors are required to use the 10-year Constant Maturity Treasury rate for the interest rate assumption included in the projections.
  • Mortality Tables – Plan Sponsors must use the Uniform Life Tables of Section 417 of the Internal Revenue Code.

To learn more about these changes and to view an example of the new statement, download our "Department of Labor Changes: Impact on Client Statements" brochure.


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