Retirement security enjoyed a healthy run in the spotlight as one of the few issues Republicans and Democrats could agree on — but that’s over now.
Not that retirement security isn’t still a bipartisan issue. It is. But so much has changed inside the Beltway since President Joe Biden began putting his administration together.
For starters, Democrats won control of the Senate, giving them one-party control over Congress as well as the White House. That means Democrats get their shot to push an agenda that has been ignored since 2016.
The Biden team is already pushing forward with an aggressive agenda that starts with COVID-19 pandemic relief and related economic recovery. Beyond that, the administration is pursuing myriad objectives on the environment, tax policy, immigration and racial reforms.
It isn’t outlandish to wonder whether there’s room for a retirement security bill. A spokesman for the Insured Retirement Institute insists that there is, adding that the trade group expects Rep. Richard Neal, D-Mass., to reintroduce his bill this year.
Chairman of the powerful House Ways & Means Committee, Neal released an ambitious retirement policy agenda in January.
It calls for implementation of auto-IRAs and auto-401(k)s as part of the framework. Neal also wants to make the Saver’s Credit refundable and build on changes from the SECURE Act.
“Beyond Social Security, families of color are far less likely to have retirement savings and access to employer-based retirement plans,” Neal said. “Policies to remedy these inequities will help increase their savings for retirement.”
Securing A Surprise
One could argue that the SECURE Act was one of the biggest accomplishments of the Trump era — after the Tax Cuts and Jobs Act of 2017. Passed in the waning days of 2019, SECURE includes a wide range of changes to retirement regulations. By far the biggest for the insurance industry is that it opened the door for annuities to be sold in retirement plans.
Although companies already can offer annuities in their 401(k) lineups, just 9% do, according to the Plan Sponsor Council of America. The SECURE Act aims to boost that figure and improve retirement readiness by eliminating companies’ fear of legal liability if the annuity provider fails or otherwise fails to deliver.
In October, Neal and Kevin Brady, R-Texas, introduced SECURE II to build on the changes in the SECURE Act to boost retirement savings options. Officially known as Securing a Strong Retirement Act of 2020, the bill included the following:
- Allow people who have saved too little to set more aside for their retirement.
- Offer low- and moderate-income workers a tax credit for contributions to a 401(k) or similar plan.
- Help people with student loans save by letting employers make retirement plan contributions equal to what an employee pays on their loans.
- Further support the use of annuities that provide guaranteed lifetime income in retirement.
- Create a new incentive for small businesses to offer a retirement plan.
The bill died without further action at the end of the year. Neal’s first bill of the 116th Congress is the Emergency Pension Plan Relief Act of 2021, which had not been passed as of press deadline. The legislation would address “the worsening multiemployer pension crisis that threatens the savings of more than a million American workers and retirees,” Neal said.
Assuming SECURE II is reintroduced, it has an uphill climb to passage. SECURE I passed the House in May 2019, then languished for months while the Senate tended to other business. That came during a time of divided government and heightened partisanship. Some pundits speculated that SECURE was resuscitated in December 2019 to give congressional candidates a success to campaign upon.
To say the atmosphere has changed a great deal since then would be an understatement.
Cutting Retirement Red Tape
The financial services industry is trying to loosen regulations governing retirement accounts. The Insured Retirement Institute’s legislative goals include:
- Increase the Required Minimum Distribution (RMD) age to 75.
- Remove barriers that limit consumers’ ability to insure against outliving retirement savings.
- Expand eligibility for retirement plan catch-up contributions for COVID-19-affected employees.
- Expand opportunities for 501(c)(3) organization employees to save for retirement.
- Clarify retirement plan startup credit to incentivize more small businesses to offer retirement plans.