U.S. Representatives Ron Kind, D-Wisconsin, and Mike Kelly, R-Pennsylvania, have reintroduced the Retirement Enhancement and Savings Act (RESA), a bill designed to increase access to retirement accounts among small businesses by making it easier to join open multiple employer plans (MEPs).
The RESA proposal includes many other provisions that enjoy broad support among retirement plan industry stakeholders. Apart from treating open MEPs as one plan under the Employee Retirement Income Security Act (ERISA) and taking care of the “one bad apple” rule to prevent one participating employer’s mistakes or misdeeds from disqualifying the whole plan, it would also require lifetime income estimates at least annually on participants’ retirement plan statements. Other provisions would establish a fiduciary safe harbor for the selection of lifetime income providers for retirement plans; more time for participants who terminate with an outstanding loan to rollover the loan and pay it off without it being a deemed taxable distribution; as well as proposals that would affect nondiscrimination rules. It would also cut costs of pensions of rural electric cooperatives.
“As a nation, we have a problem when it comes to retirement savings,” said Kind, who is a senior member of the House Committee on Ways and Means. “We need to take commonsense steps to ensure our businesses are offering their employees flexible retirement plans that set our workers up for success in their golden years. I am proud to introduce the Retirement Enhancement and Savings Act, and know that this bipartisan bill will help Wisconsinites grow savings accounts and help us avoid a retirement savings shortfall in the future.”
Better Luck This Time?
RESA has long been a focus of retirement industry lobbyists. The legislation has now been introduced in multiple Congresses but has so far failed to make it into law, despite significant amounts of bipartisan support in both the House and Senate chambers. In late 2018, when industry advocates thought it appeared likely that RESA would finally advance through Congress, other legislative priorities once again emerged and forced the retirement-focused proposal to take a back seat. Ultimately, the 115th Congress failed to enact the bill.
At the time, Christopher Spence, leader of retirement industry advocacy for TIAA, said he stands firmly in the camp supporting RESA. Like other advocates, he said TIAA would continue RESA advocacy efforts in 2019, hoping to have more success under a divided Congress that may be hungry for any points of compromise.
“I don’t think it is overselling RESA to say that it would be the biggest change to our national retirement policy in many years, certainly since the Pension Protection Act,” Spence observed. “From my perspective as an industry lobbyist, RESA is our North Star right now. There is strong consensus that the bill would really build on what the Pension Protection Act accomplished. I can’t name a single person I interact with in the retirement industry that is opposed to passage.”
Ed Farrington, head of retirement at Natixis, agreed with that sentiment. He said the U.S. retirement ecosystem has essentially been treading water for the last decade. He echoed Spence by saying the passage of RESA would be the biggest development in the space since 2006 passage of the the Pension Protection Act.
“There is no question that we can do better on a policy level,” Farrington said. “We have been thinking about and talking about the ideas in RESA for 10 years, and there is actually quite a lot of consensus on some next steps. Everyone seems to like the idea of open multiple employer plans, as a prime example. It feels like politics is stopping policy, frankly, even in areas where there is strong bipartisan consensus. If we don’t address these problems now they will come home to roost. We absolutely must take action to improve the long-term outlook of the Social Security system, as well. The system is already on the path towards insolvency, and the pressures facing the system are set to get so much more extreme over time. We must do something, soon.”