One of the key provisions of the SECURE Act is a requirement that plan administrators of ERISA defined contribution plans must express a participant’s current balance as the amount of “lifetime income” it could provide in retirement. In other words, administrators must present a participant's balance as both a single life annuity (SLA) and a qualified joint and survivor annuity (QJSA) income stream.
These two income stream illustrations, which must be included on pension benefit statements, are intended to help participants better understand how the money they have saved so far equates to an estimated monthly income throughout their retirement. The goal is to produce, on a participant's benefit statement, a result that might look like this:
| Account balance as of [date] |
Monthly payment at 67 (single life annuity) |
Monthly payment at 67 (qualified joint & 100% survivor annuity) |
|---|---|---|
| $125,000 | $645/month for life of participant | $533/month for life of participant. $533/month for life of participant's surviving spouse. |
To help plan administrators comply with this new rule, Cantina has developed an API that provides these calculations using the methods and assumptions required by the Deportment of Labor.
To support these calculations, the service maintains two key sets of data:
The API is specifically designed to obviate the need to share sensitive participant data. Instead, the response provides "lifetime income factors" that can be multiplied by a participant's balance to obtain the monthly lifetime income payments.
The API will return a table that looks like this, based on the specified 10-Year Treasury Constant Maturity Rate and the IRS §417(e)(3)(B) mortality table:
| Age | Lifetime income factor for an SLA |
Lifetime income factor for an QJSA |
|---|---|---|
| 67 | 0.0048981237 | 0.0040177786 |
| 68 | 0.0050834889 | 0.0041503399 |
| 69 | 0.0052829322 | 0.0042924689 |
| 70 | 0.0054979355 | 0.0044451205 |
| … | ||
| 119 | 0.0662174572 | 0.0515393869 |
| 120 | 0.0838301552 | 0.0838301552 |
To calculate a participant's monthly income, multiply the participant's balance by the factors in the row that correspond to her age. For example, based on this table, a 67-year old participant with a $125,000 balance would have monthly lifetime income payments of:
Note that the table begins at age 67, since the methodology assumes that any participant aged 67 or younger is treated as though she is age 67.
For convenience, the API also allows you to pass up to 5,000 anonymized participants and have the service calculate the monthly lifetime income payments for each.
| Account balance as of date |
Monthly payment at 67 (single life annuity) |
Monthly payment at 67 (qualified joint & 100% survivor annuity) |
|---|---|---|
| $0 | $0/month for life of participant | $0/month for life of participant. /month for life of participant's surviving spouse. |