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Employee Benefits Security Administration
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July 9, 2012


Assistant Secretary Phyllis C. Borzi

Before It's Too Late: A Retirement Security Update From Assistant Secretary Phyllis C. Borzi

Hello! I’m Phyllis Borzi, Assistant Secretary for the Employee Benefits Security Administration at the U.S. Department of Labor.

When the Employee Retirement Income Security Act (ERISA) was passed in 1974, most workers with access to employer-sponsored retirement plans were in traditional pension plans, called defined benefit plans.  Over time, however, the market has shifted, and defined contribution plans, such as 401(k) plans, have become increasingly popular.  These plans allow employees to save pretax dollars and give employees more control over investment decisions.  The benefits are based on the employee’s account balance at retirement.  A key drawback of these plans is that the employee bears significantly more risk than in a traditional pension plan, such as risk that you haven’t saved enough money to carry you through retirement and that you will outlive your assets; risk that you made poor investment decisions and your assets haven’t grown very much; or, the risk that a market meltdown will decimate your 401(k) account balance as you are nearing retirement and need the money the most.

Those who reach retirement age with an adequate retirement account balance in their 401(k) plans face another difficult decision – what should they do with their retirement distribution when they get it?  401(k) plans usually distribute pension benefits all at once in a lump sum and an increasing number of other retirement plans give employees a choice of taking their retirement as a lump sum – and many employees choose this distribution option.  Cashing out your account in this fashion means that you are solely responsible for managing your assets so that they will last for the rest of your life.

This very challenging task is one of the reasons that the Department of Labor has begun an initiative, along with the Department of the Treasury, to examine whether there is a need to encourage employers to offer workers the ability to draw some or all of their pension as a lifetime income stream rather than a lump sum and to encourage workers, when given that choice, to select a lifetime income stream if that is appropriate for them.  Our goal is to start a national dialogue on these critically important issues. Remember Labor Secretary Solis’ goal of achieving good jobs for everyone includes the idea that when your working days come to an end, you should be able to enjoy a secure retirement based in part on the pension you earned while you were working.




U.S. Secretary of Labor Regional Representative Ken Bennett, EBSA - CRO Benefits Advisors Lisa Sromek and Cindy Saba, Women’s Bureau Program Analyst Deborah Pascal, Monique Brunson, Rhiannon Rossi of the Chicago Foundation for Women, Jacquelyn Young from Young Consulting, Kai Love-Davis from Office of Sen. Durbin, Jayne Vellinga of Chicago Women in Trades, Rebecca Wheeler of the Asian American Institute, Danae Kovac of the Women’s Business Development Center, Wendy Pollack from the Sargent Shriver National Center on Poverty Law and Sandra DelToro of Mujeres Latinas en Accion.

On the Road, Spreading the Word about Retirement Security

My team and I enjoy getting to hear directly from all of you. Each month, the EBSA national and regional staff and Benefits Advisors reach hundreds of you with information, resources, and assistance. Whenever I or my Deputy Assistant Secretary, Michael Davis, travel on official agency business, we always try to include opportunities to meet and hear from local audiences and then bring your insights and questions back to Washington, DC.

On recent trips to New York and Boston, Deputy Assistant Secretary Davis had the opportunity to hear from women’s educational and advocacy organizations, the legal community, non-profit institutions, financial services providers, and immigrant and faith-based organizations. 

I had wonderful discussions in St. Louis and Detroit, and am looking forward to an upcoming trip to visit students at an ERISA course being taught at Southwestern Law School in Los Angeles. July 28th  is the date of our third retirement security forum in Chicago, which will be held at the University of Illinois at Chicago Campus. Click the link below to receive more details! And if you can’t make it to Chicago, I’ll have a link to video from our forum at Spelman College in Atlanta available in the next couple of weeks.




The DOL seal

The ERISA Advisory Council Seeks New Nominees

The 15-member ERISA Advisory Council provides advice on policies and regulations affecting employee benefit plans governed by the Employee Retirement Income Security Act. The council meets at least four times a year and makes recommendations to the Secretary of Labor regarding functions carried out under ERISA.

Nominations are being accepted until August 3 for vacancies representing the fields of employee organizations, employers, actuarial counseling, investment counseling, and the general public. Nominations should briefly describe the candidate’s qualifications and the group or field for which the candidate is being nominated.


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