The ERISA Industry Committee released a letter addressed to Congress that detailed its recommendations and views regarding a package of retirement reform bills dubbed “SECURE 2.0.” The In the letter, ERIC said it hopes to see a retirement reform bill passed by the end of the year.
SECURE 2.0 refers to one bill passed by the House, called the Securing a Strong Retirement Act, and two Senate bills that have passed their respective committees, but have not yet received a full vote. The Senate bills are called the Enhancing American Retirement Now Act (EARN), and the Savings Enhancement to Supplement Healthy Investments for the Nest Egg Act (RISE and SHINE). The three bills aim to increase American’s access to retirement plans in a variety of ways.
The original SECURE Act was the Setting Every Community Up for Retirement Enhancement Act of 2019.
The latest legislation aims to improve Americans’ ability to save for retirement. For example, provisions in the EARN and SSRA bills are intended to make it easier for workers with student loan debt to repay it and save for retirement. The bills would enable workers to have pay deducted to repay their loans and have their employer match that amount as a retirement plan contribution. ERIC supports this proposal and hopes to see a version of it in the final bill.
Another common obstacle to saving is the concern of needing money for an emergency, and not having it available to them quickly since it is in a retirement plan and subject to a tax penalty for early withdrawal. The EARN and RISE and SHINE bills have early withdrawal provisions that make it easier to withdraw money from a plan in certain situations. ERIC likewise supports this proposal.
The ERIC letter also supported simplifying fee disclosure and summary plan statements, and tax incentives for plan participation. It also supported a provision only found in the EARN bill, which would allow overfunded pensions to use the extra money on health and life insurance benefits for plan participants until 2032. The current expiration on that provision was set for 2025 by prior legislation.
All three bills permit well-funded plans to forego recoupment of overpayments if the overpayment was the fault of the retiree. ERIC hopes to see this provision in the final legislation.
One proposal absent from all three bills that ERIC suggested was for Congress to create a plan “lost and found.” Some employers have large and complicated retirement plans and sometimes struggle to find missing participants. It recommends that Congress require creation of a database of retirement accounts so that workers and retirees can track down past employers and access their retirement funds.
The letter also expressed disapproval for SSRA section 314 “which takes a step away from electronic delivery of plan disclosures.” Section 314 of SSRA requires participants occasionally receive certain information by paper documents.
Congressman Jim Himes, D-Connecticut, of the House Financial Services Committee, told a conference hosted by the Investment Adviser Association that he expects SECURE 2.0 to pass during this Congress, most likely during the “lame duck” period between November and January.
The full letter is available here.