In a new letter today to the White House, the Insured Retirement Institute (IRI) urged the Biden Administration to work with Congress on implementing more solutions geared towards retirement planning and readiness.
In an effort to highlight the impact of bipartisan laws, the IRI used SECURE 2.0 as a recent example on how these types of legislation affect the retirement community and workforces. “The SECURE 2.0 Act is helping America’s workers and retirees achieve economic equity, strengthen their financial security, and protect their income to sustain them throughout their retirement years,” wrote IRI President and CEO Wayne Chopus.
Among the impacts include SECURE 2.0 provisions that incentivize lower- to middle-income savers to invest in their retirement while filling gaps in employer coverage; extend retirement plan coverage to part-time employees, student loan debt assistance features, emergency savings vehicles, and more, adds Chopus in the letter.
Still, IRI notes how even with SECURE 2.0 legislation, recent findings show there is still more work to be done. An April 2023 Gallup survey found 43% of respondents said they would have enough money to live comfortably in their retirement years, leaving over half of workers and retirees stuck without a viable plan.
The data demonstrates that more action is needed to calm workers’ and retirees’ anxiety over their retirement readiness, and particularly among lower- and middle-income workers, says the IRI.
“Workers and retirees feel the burden of accumulating savings that can produce income to sustain them during their retirement years has been placed squarely on their shoulders – the individual consumer,” wrote Chopus. “This is especially true for lower- and middle-income workers. The question that arises when looking at this data and the anecdotal stories we hear is what more can be done in a bipartisan way to address the anxiety America’s workers and retirees feel?”
Four measures to retirement readiness
IRI highlights four bills out of 28 listed in the association’s 2023 Federal Retirement Security Blueprint, which it says could potentially be used as future bipartisan laws that may strengthen retirement security among workers and retireees. These include the Lifetime Income for Employees Act of 2023; The Retirement Fairness for Charities and Educational Institutions Act of 2023; The General Account Products Clarification Act of 2022; and The Automatic Retirement Plan Act.
The first bill allows retirement plan sponsors to use lifetime income solutions that have delayed liquidity features and can provide better returns as qualified default investment alternatives (QDIAs) for a portion of contributions made by participants who have not made retirement plan investment selections.
The second Act would amend federal securities law to ensure that 403(b) retirement plan participants have parity with all other retirement plan participants to choose more cost-efficient investment options that use collective investment trusts (CITs) and unregistered insurance company separate accounts, including those that offer protected, guaranteed lifetime income solutions.
The General Account Products Clarification Act of 2022 provides the legal certainty needed for insurers to continue offering stable value and principal preservation funds products, and The Automatic Retirement Plan Act addresses the retirement coverage gap and anxieties over longevity risk with retirement savings.
Each of these measures would “substantially expand access to workplace retirement plans and facilitate access to protected, guaranteed lifetime income solutions,” said the IRI.
Possible impediment to financial advice
In its letter, IRI reports one potential impediment currently under consideration by the Biden Administration that it believes could prove troublesome and limit improvements brought on by the SECURE 2.0 Act and other proposed retirement legislation.
The Department of Labor’s (DOL) most recent regulatory agenda contains a new proposal, set to be issued in August, that seeks to further expand the federal and state framework to regulate the standard of conduct for financial professionals who provide personalized advice about investments and insurance to retail consumers. A federal appeals court had previously vacated a similar DOL rule in 2018.
In its letter, the IRI maintains that such a regulation could particularly affect access to affordable professional financial advice for Black and Latino workers and retirees, many who were disproportionately impacted during the COVID-19 pandemic, and who already experienced a large wealth gap prior to the crisis.
“Federal and state regulators are actively and aggressively enforcing the existing regulatory framework of the best interest standard,” Chopus said. “Any expansion of the current regulations would stem the progress made in strengthening retirement security for many middle-class workers, retirees, and their families. It would deprive them of access to advice about retirement savings strategies and the right to work with their preferred financial advisor on terms that best fit their situations and needs.”
Chopus added, “IRI stands ready to work with your Administration and Congress on implementing the new retirement security law and advancing additional legislation to help America’s workers and retirees achieve a financially secure and dignified retirement.”
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
