Regulatory Updates

Proposed Lump-Sum Buyout Disclosure Legislation Reintroduced

Senators Patty Murray (D-WA), Tina Smith (D-MN), and Tammy Baldwin (D-WI) reintroduced the Information Needed for Financial Options Risk Mitigation (INFORM) Act of 2022. The proposal would require pension plan sponsors to provide retirees and participants with certain information when being offered a lump-sum buyout from their defined benefit plan.

The INFORM Act would require plan sponsors to send detailed information to retirees and participants 90 days before the period in which they must make a decision about the offer. That notice must provide:

  • A comparison of benefits offered under the plan and the buyout offer – including the estimated monthly benefit at normal retirement age, any subsidized early retirement option, the monthly benefit amount if payments begin immediately, and the lump sum available;
  • An explanation of how the lump sum was calculated;
  • Whether it would be possible to replicate the plan’s stream of payments by purchasing a comparable retail annuity using the lump sum;
  • The ramifications of accepting a lump sum (including longevity risks and loss of PBGC, spousal and other protections); and
  • Details about the election period, where to follow up with questions, and other essential information.

The legislation would require plan sponsors to disclose buyouts to the Department of Labor so that it can collect information on the practices. The Department of Labor would also be directed to provide a model notice.

Regulatory Updates

Proposed Enhanced Disclosures About ESG Investment Practices

Proposed Enhanced Disclosures About ESG Investment Practices

The SEC has issued a proposed rule that would add reporting requirements for registered investment advisors, registered investment companies, certain advisers that are exempt from registration, and business development companies.