Graff: SECURE 3.0 Set to Be Bigger, Driven by Auto-Enrollment Push
SECURE 3.0 is coming, and this time it will be different—and bigger, says American Retirement Association CEO Brian Graff.
Graff, speaking from the main stage during the opening general session of the NAPA 401(k) Summit in Tampa on Sunday, told attendees that political interests are beginning to align in a way that could allow for a massive, transformative new retirement legislation package to be passed into law within the next couple of years.
“A much bigger bill than we’ve ever seen before. “The potential impact of this could be extraordinary.”
Brian Graff
“A much bigger bill than we’ve ever seen before,” Graff said. “The potential impact of this could be extraordinary. Auto enrollment of all uncovered workers—all uncovered workers—is expected to lead to the creation of a million new retirement plans.”
Graff began his remarks by highlighting a surprising shift—Republican interest in a federally supported retirement savings program—driven in part by growing concern over wealth inequality and its political consequences.
Graff noted how wealth inequality has dramatically increased in the U.S. over the last 30 years. “The top 10% wealthiest Americans own over two-thirds of U.S. wealth. Even more significantly—this is a really big deal—the bottom 50% of Americans own just 2.5% of U.S. wealth.”
The impact of this disparity, he continued, is reflected in polls of younger Americans—almost all of whom believe their generation will have a much more difficult time buying a home, and just have little confidence of any Social Security coming their way.
“It’s hard to imagine these views are politically sustainable without some changes being made,” Graff said. “So the real question is what will those changes be?”
What’s being considered
While there has been some talk around wealth taxes, Graff explained how momentum is building around a much more “pro-capitalism” solution—expanding savings and investment access, particularly through universal (or near-universal) retirement coverage; a federal IRA program for uncovered workers; and leveraging and potentially enhancing the Saver’s Match.
He talked about President Trump’s remarks from the State of the Union address, where without providing details, he announced that next year workers will be given “access to the same type of retirement plan offered to every federal worker” with federal matching contributions up to $1,000 per year.
An executive order is currently being developed, which Graff said is expected to direct treasury to establish an IRA program for uncovered workers administered by a brokerage firm similar to Trump Accounts.
“To have a Republican administration put its weight behind automatic enrollment of uncovered workers at a national level would be an enormous development.”
Brian Graff
“We have got some indication that the White House may be supportive of a follow-up legislative proposal that would enhance the Saver’s Match even more than what it is now, such as expanding the income eligibility range and significantly provide for auto enrollment of uncovered workers into the program,” Graff said. “To have a Republican administration put its weight behind automatic enrollment of uncovered workers at a national level would be an enormous development. If that’s the case, the prospects of a national retirement plan coverage requirement would increase substantially.”
Graff also highlighted the state and federal convergence around auto-IRA programs, with 17 states already enacting similar auto enrollment requirements—and there’s a caveat. “Now, for the first time red states are getting into the act. Since the State of the Union, both Mississippi and Utah have enacted legislation to establish retirement savings programs for small businesses in their states,” Graff said, adding that ARA has been in conversations with 10 other red state treasurers who recognize the policy problems with uncovered workers in their states.
He said they would prefer a solution of their own as opposed to a federal program, but acknowledged that “more states coming to the party increases the likelihood of federal legislative action, and such federal legislation has already been percolating for some time.”
One of those that has been “percolating” is the Retirement Savings for Americans Act, which would create a federally run IRA program to cover workers who have to be auto enrolled into the program.
ARA opposes RSAA because it would provide special benefits for lower-income workers in the federal program, but not those saving in a workplace retirement plan or a state auto-IRA plan.
“These lower-income workers would get up to a 5% of pay contribution, but again, only if they’re participating in the federal IRA plan. This would result in two lower-income workers making the same salary receiving sizably different federal subsidies for savings,” Graff said. “ARA opposes that idea because we feel strongly that it’s unfair to treat lower-income workers differently simply because of where they save.”
Graff then talked about the other current retirement plan coverage bill on Capitol Hill, which is the Automatic IRA Act, led by senior Democrat on the House Ways and Means Committee Richie Neal.
“This bill would also create a federal IRA program for uncovered workers that would auto-enroll workers into the program. Are you noticing a trend here? All of these proposals are trending towards a federally run IRA program,” Graff said.
But unlike RSAA, Graff noted that the Automatic IRA Act leverages the current law Saver’s Match, similar to the President’s proposal.
“Importantly this proposal treats all lower-income workers the same no matter where they save, which is why ARA has endorsed the Auto IRA Act.”
How it could unfold
Graff concluded his comments by talking about what is expected to come next—but don’t hold your breath.
“First of all, pretty certain, not happening this year. Frankly, it doesn’t look like much of anything is going to be happening this year,” Graff said. “Next year on the other hand is likely to be very different, with the new Congress.”
He noted that prediction markets like Kalshi and Polymarket have estimated Democrats have about an 85% chance to take over the House following midterm elections, while the vast majority of political pundits and history itself would suggest a split government following the midterm being the most likely scenario.
For retirement policy, this would be good news.
“A divided government is usually a vital ingredient for making a legislative soup,” he said. “Retirement policy still remains one of a handful of issues Congress is able to work on when there’s a split government.”
So there is a good reason to suspect work toward another significant retirement legislation package will advance during the next Congress.
“And so you know, they’re likely to call it SECURE 3.0,” Graff added. “You may be tired of that name, but as one senior staffer in a congressional office said, it’s a brand name at this point and every congressional office knows what it is, knows its retirement, and knows it’s bipartisan.”
He then explained why he thinks this time—and SECURE 3.0—will be different.
While retirement legislation has often flown under the radar, with past administrations showing limited interest and generally going along with it because it was bipartisan, the Trump administration is expected to take great interest.
Graff said senior administration officials including the Treasury Secretary himself, the director of the National Economic Council and others are expected to be actively involved in crafting the legislation.
“This is an issue for the President, Graff said, “and that means the top leaders of the administration will want to be in on the action.”
Both Democrats and the White House are saying that the centerpiece of any retirement legislation that could happen in the next Congress will have to be enhancing the Saver’s Match and provisions to auto-enroll uncovered workers.
Which is why it could be a much bigger and more impactful bill than the SECURE Act or SECURE 2.0.
“So get ready industry—this is a potential tsunami retirement plan opportunity, and a whole lot of plan onboarding that’s going to be coming your way.”
SEE ALSO:
• Aronowitz Makes Case Against Frivolous ERISA Lawsuits at NAPA
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.