It’s a midterm election year. Inflation is running rampant. The Russians invaded Ukraine. Voting rights and climate change remain hot topics, and President Biden has nominated a Black woman for the Supreme Court. Yes, the pandemic crisis has calmed down, with mask mandates being lifted right and left. But with everything else facing our nation’s elected leaders, will they really get around to making improvements to our nation’s retirement system?
Retirement security is a rare issue that has traditionally enjoyed bipartisan support. But getting Republicans and Democrats to come together on anything during an election year is a challenge. And with an evenly divided Senate and a narrow majority in the House, Democrats may lose control of Congress in the midterm elections in November.
Still, there is plenty of optimism that meaningful retirement reform will indeed make it through Congress and onto President Biden’s desk this year. That optimism was evident during a press conference Thursday hosted by the Insured Retirement Institute (IRI) to unveil its 2022 Retirement Security Blueprint.
One of IRI’s principal 2022 public policy goals is enacting retirement security legislation that builds upon the SECURE Act of 2019.
Last year, the U.S. House of Representatives Ways and Means Committee passed H.R. 2954, the Securing a Strong Retirement Act, and the House Education and Labor Committee passed H.R. 5891, the Retirement Improvement and Savings Enhancement (RISE) Act. Similar bills, the Retirement Security and Savings Act (S. 1770) and the Improving Access to Retirement Savings Act (S.1703), were introduced in the Senate. IRI expects these measures to advance in 2022.
“We are optimistic that Congress will move bipartisan legislation this year. Elected leaders from both parties understand that retirement anxiety and insecurity is an issue for many people, and that drives a willingness to find and enact solutions,” said Wayne Chopus, IRI President & CEO.
“The reason why we’re very optimistic is we continue to see interest from the Hill in this area with bills being introduced, with hearings being held, with discussions continuing about this in all the appropriate committees,” adds Paul Richman, IRI Chief Government and Political Affairs Officer.
“There are bills that are going to have to get done before the end of the year, and we think that a bipartisan-supported retirement package can be included in one of those bills.”
Paul Richman, IRI
Richman referred to an AARP study as a reason Congress remains focused on retirement security. The study shows that about 60% of voters age 25 or more are concerned about their retirement security.
“We think Congress is going to respond to that concern,” Richman said. “They know there’s more to do than what they did in SECURE 1.0 that passed back in 2019, and there is bipartisan support for these measures. So I think that’s all a positive indication that Congress will take it up.”
Richman added that Congress has shown it can do more than one thing at a time. “It is a question of timing, of floor consideration and things like that but there are bills that are going to have to get done before the end of the year, and we think that a bipartisan-supported retirement package can be included in one of those bills.”
2022 Blueprint priorities
Chopus said IRI’s 2022 Federal Retirement Security Blueprint includes “common-sense, bipartisan policies to help our nation’s workers and retirees achieve economic equity, strengthen their financial security, and protect their income to sustain them throughout their retirement years.”
The Blueprint is built on the following five pillars that IRI says establishes a foundation to strengthen and enhance the nation’s retirement security:
1. Expand opportunities to save for retirement by enhancing access to, and features of, workplace retirement plans
2. Facilitate and expand the use of protected, guaranteed lifetime income to produce sustainable income during retirement
3. Preserve and promote access for retirement savers to professional financial guidance, education, and information
4. Enhance protections to safeguard Americans from financial exploitation and fraud; and
5. Maintain and augment the current tax treatment of retirement savings
Among key provisions supported by IRI in its Blueprint is a requirement that new employer-provided retirement plans automatically enroll employees. Plan participants would have the ability to opt out of a plan. IRI also calls for measures to help insure against the risk of outliving retirement savings by facilitating the use of protected lifetime income solutions, such as qualifying longevity annuity contracts (QLACs), and authorizing annuities for use as a qualified default investment alternative in retirement plans.
Another IRI priority is to urge the U.S. Securities and Exchange Commission (SEC) to reduce regulatory barriers that inhibit innovative products such as registered index-linked annuities (RILAs), the fastest-growing segment of the annuity market. RILAs offer a way for investors to bring balance to their retirement savings portfolio by allowing the purchaser the opportunity to participate in some market growth along with a reduced downside exposure to partially protect the investor from market losses. IRI believes that the SEC has the authority to act on this issue, but the organization is also pursuing a legislative solution that directs the Commission to address this concern.
IRI will continue to pursue regulatory modernization across federal and state jurisdictions to allow greater use of electronic means of transacting business, including document delivery, notarization, and signatures while preserving the option to receive paper upon request.
The association also expects to see final regulations from the Department of Labor requiring retirement plans to provide lifetime income illustrations to help plan participants understand how much monthly income their workplace retirement plans may provide during their golden years.
At the state level, IRI will continue to advocate for adoption of National Association of Insurance Commissioners’ model regulation that holds insurance professionals to a best interest standard of conduct when they recommend annuities to their clients. To date, 20 states have adopted this model.
“We look forward to working with Congress and regulators in the coming weeks and months to build greater support for our proposals,” Chopus added. “We are optimistic that they will help more consumers achieve a financially secure and dignified retirement.”
Additional objectives
Among many others, the Blueprint also includes sections on:
• Reforming the Required Minimum Distribution (RMD) Rule
• Authorizing the formation of 403b Pooled Employer Plans (PEPs)
• Helping employees save for retirement while repaying student loans
• Increasing catch-up contribution limits
• Offering workplace retirement plans to employees of legal cannabis businesses
• Establishing a national online “lost and found” for retirement accounts
Read IRI’s complete 2022 Federal Retirement Security Blueprint here.
SEE ALSO:
• House Committee Tackles Retirement Security Issues
• Bill Allowing Annuities as QDIAs in 401ks Introduced in House
• ‘Auto Reenroll Act of 2022’ Seeks to Boost 401k Participation
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
Please encourage our legislators and their lobbyists to consider changing the RMD rules for non-spousal heirs of retirement accounts to use the RMD schedule of the original account owner instead of the 5 and 10 year rules established in 2019. Simplification makes this easier on heirs and the account custodians. Tax collection is similar especially since many heirs do not limit withdrawals to RMD only. I suspect research would confirm this but I have not found anything done on this issue yet. Please consider taking charge of this alternative approach for the sake of all involved!