SECURE 2.0 retirement legislation has one significant ally in its corner, said a former top administrator at the Department of Labor: Legacy.
That is, the legacies of its main proponents. Officially known as the Securing a Strong Retirement Act of 2022, the bill is co-sponsored by Sens. Rob Portman, R-Ohio, and Benjamin Cardin, D-Md., both of whom are retiring, noted Bradford Campbell, partner at Faegre Drinker.
SECURE 2.0 passed the House in March with overwhelming bipartisan support, 414-5. It has since languished in the Senate despite both parties claiming to support it.
During a Faegre Drinker webinar Thursday, Campbell projected passage odds at 70%, well above what he called the general 50-50 consensus. In addition to the legacy issue for Portman and Cardin, 32-year Rep. Richard E. Neal, D-Mass., is likely to lose his powerful chairmanship of the House Committee on Ways and Means.
So, there is a lot at stake for these politicians who have adopted SECURE 2.0.
"There's some very key influential people for whom this can be sort of a legacy issue. And so I think there are legs behind it." — Bradford Campbell, Faegre Drinker partner
"There's some very key influential people for whom this can be sort of a legacy issue," Campbell said. "And so I think there are legs behind it. There's just a lot of work to get done between now and then."
If SECURE 2.0 does make it to President Biden's desk for signature, Campbell said, it will likely follow a similar post-election path as the original SECURE (Setting Every Community Up for Retirement Enhancement) Act. That bill passed in late December and was signed by then-President Trump.
SECURE 2.0 includes 49 provisions aimed at simplifying and further encouraging the establishment of retirement savings plans. The bill includes:
An automatic enrollment requirement for 401(k) and 403(b) plans.
A phased-in increase in the age when the required minimum distributions begin, from the current age of 72 to age 75 by 2033.
An increase in catch-up contribution limits for people ages 62-64.
The ability to count student loan payments as plan contributions eligible for the employer match.
There are actually three different bills closely associated with retirement security, explained Campbell, former assistant secretary of labor under former President George W. Bush. The House and Senate will need to negotiate agreement on one bill that can pass both chambers.
"Part of the difficulty is that they just have to reconcile a lot of different ideas here," Campbell said. "There is some real overlap, but some of the most important and interesting provisions are not in all three bills."
Some key things that are in all three bills include allowing 403(b) plans to invest in collective trusts and be in MEPs (multiple-employer plans) and PEPs (pooled-employer plans), Campbell said.
"There's also some really significant provisions that are only in one or two of the versions," he added. "One of the most significant is only in the House bill, and that would require new plans in the future, to have to include auto enrollment and auto escalation. That would obviously be a very significant change in the system going forward."
Likewise, two of the three bills would allow for employers to make matching contributions to a participant's account based on student loan repayments by the participant. Despite being a popular provision, Campbell noted, it is not in all three bills.
Insurance industry advocates such as the Insured Retirement Institute have been pushing for the changes since the SECURE Act in 2019.
In supporting retirement reforms, the American Council of Life Insurers last year said more than 15 million annuity-based IRAs are held by individuals.
“As service and product providers, as well as employer plan sponsors, life insurers believe that adequately and consistently saving for retirement, effectively managing assets throughout retirement and utilizing appropriate financial protection products are all critical to Americans’ retirement and financial security,” according to ACLI’s statement after SECURE 2.0 was passed by the Ways and Means Committee.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected] Follow him on Twitter @INNJohnH.