The Government Accounting Office has issued this 72-page report: “Private Pensions: Participants Need Information on Risks They Face in Managing Pension Assets at and during Retirement.” The report makes this statement:
GAO is not recommending executive action. However, to improve public awareness and understanding of important considerations related to managing pension and retirement assets in retirement, the Congress may wish to consider amending the Employee Retirement Income Security Act to require plan sponsors to provide participants with a notice on risks that individuals face in managing their income and expenditures at and during retirement. The Congress could consider stipulating that this notice must be provided at certain key milestones.
A focus of the article seems to be the concern that retirees could outlive their assets when they choose a lump sum, due to the fact that people are living longer. The article states that “retirees need to be aware of the risk of outliving one’s assets in retirement and the financial risks individuals face in retirement.” The panel noted that providing information on such risks is very or extremely effective in helping retiring participants make decisions about managing their pension assets.
(The report reminds us that the number of defined benefit plans maintained by employers has decreased from 139,000 in 1979 to 56,000 in 1998. I would love to know what those figures are for 2003.)