As we all know, one contributing factor in the decline of DB plans is the lack of understanding/appreciation by the individual participant. Since most actuaries are keenly aware of this, and since many of us have a hand in producing a yearly “pension statement”, I suggest we consider how that statement can improve employee understanding and appreciation. Thus, I suggest using existing materials as a vehicle for this improvement.

Specifically, when you produce a statement that shows a benefit projected to NRD, I suggest including a short message on every Statement. This can also be expanded to the production of benefit calculations and estimates. The purpose is a simple method to alert the recipient to the value of the benefit. For example:

"The plan benefit is payable for your lifetime. You cannot outlive your pension income. Looking at this another way, if you receive the projected pension benefit for 20 years, you will receive a total of $xxx,000 from the Plan."

Comments? Suggestions?

I'm not an actuary, but I think it's a fantastic idea. I'm just not sure what it would look like once the lawyers get done with all the caveats and conditions. (And I'm not saying that to put down the lawyers - their job in this case is to cover our backsides, so some healthy paranoia is probably a good thing!) Does the DOL have any sort of model paragraph that has their blessing?