While acknowledging the significant progress made in the past 4 years with the passage of the SECURE Act and SECURE 2.0, the Insured Retirement Institute still has a formidable “to-do” list for how Congress can strengthen and enhance the nation’s retirement security.
Today, IRI unveiled its 2023 Federal Retirement Security Blueprint detailing the association’s federal legislative and regulatory public policy agenda, featuring what the document calls “common-sense, bipartisan policies to help workers and retirees achieve economic equity, strengthen their financial security, and protect their income to sustain them throughout their retirement years.”
Wayne Chopus, IRI President and CEO, said IRI “looks forward to engaging Congress to advance new legislation that delivers additional retirement solutions.”
IRI’s latest Blueprint is built on five pillars:
1. Expand opportunities to save for retirement.
2. Facilitate and expand the use of protected, guaranteed lifetime income solutions to insure against the risk of outliving one’s retirement savings.
3. Foster innovation, modernization, education, and advice.
4. Boost protections to safeguard consumers, diverse representation, and participation.
5. Maintain and augment the current tax treatment of retirement savings.
Under that first pillar, the Blueprint states IRI wants to require most businesses to offer employees access to a workplace retirement plan, and to re-enroll employees into a workplace retirement plan every three years if those employees initially opted out of a plan. Employees could choose to opt out again.
To accomplish this, IRI calls for Congress to enact legislation such as Title XII, Committee on Ways and Means, Subtitle B, Part 1, Automatic Contribution Plans and Arrangements included in the Build Back Better Act.
In the Blueprint, IRI cites a recent study of the impact of this measure on workers’ retirement security which found that over the next 10 years, $7 trillion in additional retirement savings would be generated and 62 million new retirement savers would be created, 98% of whom earn less than $100,000 per year. This includes 7 million new Black savers and 10.8 million new Latino savers.
IRI also says the legislation would help address the anxiety felt by many of America’s workers about outliving their retirement savings by requiring that participants with account balances of $200,000 or more be given the choice to receive up to 50% of their vested balance in the form of a protected, guaranteed lifetime income product.
SECURE 2.0 mandated that all new 401(k) and 403(b) plans automatically enroll participants in their respective employer plans while preserving the employees’ choice to opt out of coverage. But IRI’s Blueprint notes that even with evidence showing the benefits of auto-enrollment for workers, many workers still choose to initially opt out of their employer’s plans—leaving millions in potential savings for retirement unaccumulated.
To address this challenge, IRI calls on Congress to enact legislation such as the “Auto Re-enroll Act of 2022,” which would amend the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code to allow plan sponsors to re-enroll non-participants at least every three years.
Blueprint calls for easier access to annuities
Also among the 28 proposals in IRI’s 2023 Blueprint are the following:
- Allow caregivers who leave the workforce to make catch-up contributions to retirement accounts when they rejoin the workforce. Most caregivers are women.
- Eliminate a regulatory barrier that effectively prohibits using protected, guaranteed lifetime income solutions with delayed liquidity features as a qualified default investment alternative.
- Eliminate the disparity in treatment under current securities law for 403(b) retirement plan participants to allow them access to more cost-efficient investment options that other retirement plan participants have.
- Allow for a diverse slate of indexed and variable annuity contracts with guaranteed benefits to be eligible to be treated as qualifying longevity annuity contracts (QLACs).
IRI also anticipates significant federal and state regulatory activity in the coming months, including implementing SECURE 2.0. The association also expects the SEC to continue to pursue an active regulatory agenda.
And the U.S. Department of Labor (DOL) could seek changes to the rules that determine when a financial professional’s actions trigger fiduciary status under ERISA.
At the state level, IRI’s Blueprint says it will continue to advocate for adopting the 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, 33 states have adopted this model, and IRI expects that tally to hit 40 or more this year.
“Our changing national demographics mean more consumers will need access to retirement plans and reliable retirement income from the savings those plans generate,” Chopus said. “That means a strong future for our industry and a very busy agenda for IRI.”
SEE ALSO:
• IRI ‘Optimistic’ Meaningful Retirement Legislation Will Pass in 2022
• 401(k) Specialist SECURE 2.0 Guide
• ‘Auto Reenroll Act of 2022’ Seeks to Boost 401k Participation