Legislation to Beef Up Pension Buyout Info Reintroduced

A trio of Democratic senators has reintroduced legislation focused on providing information to participants affected by a pension buyout.

The Information Needed for Financial Options Risk Mitigation (INFORM) Act of 2022 was reintroduced by Sens. Patty Murray (D-WA), Chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee; Tina Smith (D-MN) and Tammy Baldwin (D-WI). It would require pension plan sponsors to provide retirees and participants with “critical information about the trade-offs involved when they offer a lump-sum buyout of their lifetime retirement plans and protect families’ savings.”

The INFORM Act would require plan sponsors to send a notice 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;
• an explanation of how the lump sum was calculated;
• the ramifications of accepting a lump sum (such as the loss of certain federal protections); and
• details about the election period, where to follow up with questions, and other essential information.

The legislation would also require plan sponsors to disclose buyouts to the Department of Labor so that it can collect information on the practices.

“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,” said Murray. “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 National Retiree Legislative Network (NRLN) and Pension Rights Center (PRC) have endorsed the legislation. Murray, Smith and Baldwin first introduced the bill in the previous Congress.

A fact sheet on the INFORM Act is available here; full text of the legislation is available here.