SENATE COMMITTEE TO EXPLORE CHALLENGES IN U.S. RETIREMENT SYSTEM

Posted on May 13, 2019

IRI Says Hearing Is a “Strong Signal” of Intent to Advance Legislation

WASHINGTON, D.C. – A Senate Finance Committee hearing tomorrow demonstrates Congress’ ongoing bipartisan commitment to advance retirement security legislation, according to the Insured Retirement Institute (IRI), the leading national trade association for the retirement income industry.

Last  month, the Senate Finance Committee chairman, Sen. Chuck Grassley (R-Iowa) and Ranking Member, Sen. Ron Wyden (D-Ore.), introduced  the Retirement Enhancement and Savings Act (RESA) (S. 972). The bill is similar to a House bill, the Setting Every Community Up for Retirement Enhancement Act of 2019 (H.R. 1994) or “SECURE Act,” that unanimously passed out of the House Way and Means committee last month. The House is expected to vote on the SECURE Act before a Memorial Day recess period.

“The Senate hearing is a strong signal that retirement security legislation is a significant priority for Congress this year,” said Wayne Chopus, IRI president and CEO.

IRI submitted a written statement to the Finance Committee expressing strong support for RESA and urging senators to quickly advance the measure and then begin working with the House to approve a final version for the president’s signature.

“The House and Senate legislation are close to identical and both chambers would likely need only a short time to work together to resolve their differences and finalize a bill for the president,” Chopus added.

“IRI is grateful to Chairman Grassley and Sen. Wyden for their commitment and leadership to help improve the opportunity for millions of American workers to achieve a financially secure and dignified retirement,” Chopus continued. “We will continue to work with them and other Senators to get a bill enacted this year.”

Both RESA and the SECURE Act would remove barriers that discourage small business employers from banding together in a Multiple Employer Plan to achieve economies of scale and delegate responsibility for sponsoring the plan to a professional plan fiduciary thereby facilitating the offering of a retirement plan to their workers. 

To help workers ensure that they do not outlive retirement savings, the measures clarify fiduciary responsibilities of employers that will allow them to make lifetime income products available as an option within their retirement plan.

A related technical provision will ensure the portability of lifetime income products. Current law jeopardizes the guarantees associated with those investments if their employer changes record keepers. RESA and the SECURE Act will permit plan participants to preserve their lifetime income investments and avoid surrender charges and fees.

Another provision will help savers make more-informed decisions regarding their finances by providing lifetime monthly income estimates on benefit statements. IRI research found that more than 90 percent of workers want retirement income estimates and would find them helpful. More than 75 percent of workers said they would increase their savings level after seeing these estimates.

Finally, the bills will increase opportunities for workers to save by enhancing automatic enrollment and escalation features. Studies have shown that automatic enrollment is extremely successful in getting more people to save for retirement with participation rates at least 10 percentage points higher in plans with automatic enrollment. By removing the auto enrollment safe harbor cap and the cap requiring automatic escalation of employee deferrals go no higher than 10 percent of employee pay, the legislation will create more opportunities for Americans to save more for their retirement.

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Contact: Dan Zielinski

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