Murray Slams Trump Administration for Backpedaling Effort to Protect Retirees
Senator Murray criticized Trump Administration for reversing Treasury Department’s 2015 position on regulating lump-sum payouts, which save companies money by giving retirees more risk and often less money
Pensions pay out regularly over a retiree’s lifetime, are covered by federal ERISA protections, and backed by the PBGC
Lump sum payouts transfer risk from the employer to the retiree who must make the one-time payout last the rest of their life, and have no federal protections
Trump Administration also previously rolled back the DOL’s fiduciary rule, another important protection for main street retirement savers
Washington, D.C. – Today, Senator Patty Murray, (D-WA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, released the following statement in response to the Trump Administration’s decision to give employers across the country the green light to offload pension liabilities and transfer risk to retirees by offering them a one-time lump-sum payment in lieu of the pensions they were promised. A 2015 notice from the Treasury Department made clear it intended to propose rules to address this practice, however a new notice from the Trump Administration reverses course.
“President Trump is once again making it clear that he doesn’t care about retirees. He’s already rolled back rules requiring financial advisors to work in their clients’ best interests, and now he’s giving companies a green light to save money by dumping their retired employees with a one-time payout and transferring all of the risk on retirees instead of providing them the financial security of the lifelong pensions they were promised and have earned. I’m going to keep fighting against policies like this that undermine the economic security of workers and retirees across the country.”
Pensions pay out regularly over a retiree’s lifetime, are covered by the Employee Retirement Income Security Act’s (ERISA) protections, and are backed by the Pension Benefit Guaranty Corporation (PBGC). Lump-sum payouts have no such protections. These payouts transfer risk from the employer to the retiree by forcing them to make the one-time payout they receive last the rest of their life. Companies generally offer lump-sum payouts to save money, and those who receive them often end up receiving less money than they would have otherwise due to the complex actuarial formulas that determine the immediate value of the lifetime pension benefit.
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