U.S. Senators Johnny Isakson (R-Georgia) and Chris Murphy (D-Connecticut) have introduced a bill they are calling the Lifetime Income Disclosure Act, which would require 401(k) plan sponsors “to inform participating workers of the projected monthly income they could expect at retirement based on their current account balance.”

The senators say they have garnered significant bipartisan support for the bill, which they believe will help average Americans ensure they do not outlive their savings in retirement.

“With the shift to 401(k) plans, American workers have become increasingly responsible for putting savings into and managing their retirement investments,” the senators explain. “However, many Americans are not saving enough, and they are unsure how quickly to draw down their savings in their retirement years.”

The theory behind the legislation is far from new thinking and represents just the latest group of Washington lawmakers to put their name behind an effort at reforming and improving retirement plan performance in the United States. Beyond Congress, the Department of Labor’s Employee Benefits Security Administration’s (EBSA) in 2013 shared advanced notice of proposed rulemaking on the subject—followed by a comment period that saw some industry practitioners share concerns that the financial assumptions and calculation tools underlying such disclosures must be customizable enough to give participants an accurate income projection.

Others said they were concerned that plan fiduciaries could be found to be on the hook for inaccurate—and especially over-generous—projections of income supplied to participants in the Employee Retirement Income Security Act (ERISA) context. The EBSA effort is still unfolding and could progress later this year or next.

To address some of these concerns, Senators Isakson and Murphy patterned their proposal on the Social Security Administration's annual statements, which are mailed once each year to working Americans to inform them of estimated monthly benefits based on their current earnings.

“Congress mandated annual Social Security statements in 1989, and they have proven to be very useful to workers in preparing for retirement,” the pair suggests. “By providing similar information for 401(k) plans, the Lifetime Income Disclosure Act would give American workers a more complete snapshot of their projected income in retirement.”

Murphy adds, “The Lifetime Income Disclosure Act is a simple solution to give working Americans an easy way to judge for themselves whether they’re saving enough to maintain the standard of living they’re used to. This bill won't put money in workers' pockets, but it will empower them to make smarter decisions."

Specifically, under the act, defined contribution plans subject to ERISA would be “required annually to inform participants of how their account balance would translate into a monthly income stream based on age at retirement and other factors.”

To ensure there is no material burden or potential liability on employers who voluntarily sponsor 401(k) plans, the legislation directs the Department of Labor to issue tables that employers may use in calculating an annuity equivalent, as well as a model disclosure. Employers and service providers using the model disclosure and following the prescribed assumptions and DOL rules would be insulated from liability, the senators suggest.

Isakson previously introduced the legislation in the 111th and 112th Congresses. Full text of the legislation is available here.