In late 2019, Congress passed the Setting Every Community Up for Retirement Enhancement Act. Section 203 of the SECURE Act introduces lifetime income disclosures, and on Aug. 18, the Department of Labor's Employee Benefits Security Administration announced an interim final rule for compliance with this provision of the SECURE Act.
I applaud this long-anticipated action and as invited by EBSA, offer the following comments on the interim final rule's assumptions and methodologies. First, simplicity in regulatory rule-making is a virtue that can become a vice of ineffectiveness if the rules are too simple to perform their intended function. Therefore, I urge the Department of Labor to consider flexibility in its general regulatory assumptions rather than the proposed framework — which assumes that all participants are age 67, start annuity payments at age 67 and have an equal-age spouse, regardless of actual marital status, spousal age or a spouse's own earned retirement benefits. By assigning the same retirement income number from a given account balance to a 37-year-old retiring in 30 years as to a 67-year-old retiring now, the rule reflects neither the growth in balance nor the impact of inflation on the income received by starting payouts at materially different dates.
I offer five principles of retirement income. EBSA is on track to complete the first principle and I urge them to consider incorporating the four remaining principles.