By Staff And Wire Reports
More U.S. workers would get opportunities to participate in an employer-provided retirement under a bipartisan retirement security bill introduced today in the U.S. House of Representatives.
The measure contains several provisions which the Insured Retirement Institute (IRI) has long-supported and advocated for enactment.
Known as the Retirement Enhancement and Savings Act, the bill was initially introduced in previous session. It was re-introduced by Reps. Ron Kind, D-Wisc., and Mike Kelly, R-Pa., as the House Ways and Means Committee conducted a hearing Wednesday on retirement security.
The bill contains several measures to help Americans by expanding opportunities to save for retirement; increasing access to lifetime income products; helping savers make more-informed decisions about their finances for retirement and enhancing features of workplace retirement plans.
“Americans today face many challenges in saving for retirement because they do not have the opportunities or access to do so through a private sector workplace retirement plan,” said Wayne Chopus, IRI president and CEO. “The enactment of RESA would go a long-way in helping Americans to overcome the obstacles they now face in saving for their retirement.”
RESA would remove restrictions on the types of employers that can band together in a Multiple Employer Plan (open MEPs). Allowing small businesses to band together to achieve economies of scale and to delegate to a professional plan fiduciary responsibility for sponsoring the plan would facilitate more employers offering a retirement plan to workers.
To help workers ensure that they do not outlive retirement savings, RESA would expand access to lifetime income products provided by insurers that meet certain existing regulatory requirements enforced by state insurance regulators, such as capital and reserving standards.
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 recordkeepers. RESA 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, RESA 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, RESA will create more opportunities for Americans to save more for their retirement.
“IRI is thankful to Reps. Kind and Kelly for their leadership and commitment in pursuing legislation that will help more Americans achieve a financially secure retirement,” Chopus said. “We believe the enactment of RESA will provide Americans with common-sense measures to help them address the challenges and overcome the obstacles they face as they plan and save for their retirement.”