A bill requiring pension plan sponsors to provide participants and retirees with key information when offering lump-sum buyouts was reintroduced Wednesday in the Senate.
The legislation, the Information Needed for Financial Options Risk Mitigation Act, referred to as the INFORM Act, would require plan sponsors offering buyouts to provide participants and beneficiaries a paper notice 90 days before the period in which they must make an election; a comparison of benefits, explanation of how the lump sum was calculated, ramifications of accepting a lump sum such as the loss of certain federal protections, details about the election period, and where to follow up with questions to be included in the notice; and a disclosure to the Department of Labor.
The bill was introduced by Sens. Patty Murray, D-Wash., chairwoman of the Senate Health, Education, Labor and Pensions Committee, Tina Smith, D-Minn., and Tammy Baldwin, D-Wis. The three senators first introduced the bill in March 2020 during the previous congressional session.
"No one's retirement planning should be put at risk because they didn't have the information they needed before making a big decision about whether to trade their lifetime pension payments for a one-time buyout," Ms. Murray said in a news release. "After working for decades to earn a retirement, people deserve to have better information about how a lump-sum buyout of their lifetime pension could undermine their financial future — and my commonsense bill will make sure they have that information so they can make an informed decision."
The senators in the news release cited a 2015 report from the Government Accountability Office that found disclosures to retirees about lump-sum offers often omitted key information and that retirees often did not fully understand the trade-offs involved.
"After putting in a lifetime of work, retirees deserve to understand how a lump-sum buyout of their hard-earned pensions could impact their retirement plans," Ms. Smith said in the news release.
