The U.S. House of Representatives voted Tuesday evening to pass the Securing a Strong Retirement Act, marking an important step forward for the ambitious retirement-focused legislation package. The final vote on the bill was 414 to 5.
In a host of ways, the bill expands access to workplace retirement plans and protected lifetime income products. If passed by the Senate in its current form, the bill would expand automatic enrollment in 401(k) plans by requiring 401(k), 403(b) and SIMPLE plans to automatically enroll participants upon becoming eligible, with the ability for employees to opt out of coverage. Notably, in the version of the bill that passed in the House, existing retirement plans are exempted from this rule. The bill’s supporters say this significant expansion of automatic enrollment will meaningfully increase participation in retirement savings at work.
The Securing a Strong Retirement Act also enhances the retirement plan start-up credit, making it easier for small businesses to sponsor a retirement plan. The legislation further increases the required minimum distribution age to 75 and indexes the catch-up contribution limit for individual retirement accounts. The lawmakers who support the bill say these changes will make it easier for American families to prepare for a financially secure retirement.
Other features of the legislation package would provide support to workers with student loans by allowing employers to match their loan repayments with retirement account contributions.
“This bipartisan legislation will deliver measurable benefits to America’s workers and retirees who have anxiety over whether they will have sufficient retirement income that lasts throughout their golden years,” says Wayne Chopus, President & CEO of the Insured Retirement Institute, noting advocacy efforts will now shift to the Senate to continue the positive momentum and get the bill to President Joe Biden this year.
“To provide long-term financial security for working Americans, the laws relating to retirement policy need to be as durable and reliable as retirement plans themselves,” adds Lynn Dudley, senior vice president, global retirement and compensation policy, American Benefits Council. “That is why retirement legislation has historically been an oasis of bipartisanship in Washington.”
Chopus and Dudley say many provisions in the legislation—commonly dubbed “SECURE 2.0” after the Setting Every Community Up for Retirement Enhancement Act of 2019—were developed in cooperation with the retirement industry.
“The U.S. House of Representatives’ overwhelming approval of the Securing a Strong Retirement Act reflects the bill’s broad support and represents another very encouraging step toward a more modern and inclusive retirement system,” Dudley says. “This measure builds on the bedrock of employer plan sponsorship while recognizing and addressing the challenges brought about by the pandemic. We commend the bipartisan champions of retirement policy on Capitol Hill and look forward to working toward final enactment of the bill.”
Susan Neely, American Council of Life Insurers President and CEO, says the House passage of the bill comes at a critical time for all savers, but especially minorities.
“Nearly two-thirds of Hispanic families and more than half of Black families don’t have any form of retirement savings,” she notes. “This important legislation will give them and, indeed, all workers, the tools and the time they need to build their savings.”
Investment Company Institute President and CEO Eric Pan calls the passage of the legislation by such a wide margin a “great achievement” for both Congress and the retirement industry advocates that have been pushing for the bill’s advancement. In addition to celebrating its headline features, he points to the fact that the bill simplifies and clarifies more than a dozen retirement plan rules.
“It will significantly strengthen our nation’s retirement savings system by expanding coverage, further increasing savings opportunities and streamlining administrative rules,” Pan says. “ICI hopes that the Senate will act quickly to send SECURE Act 2.0 to the President for signature.”
In an encouraging sign for the bill’s future, both Republican and Democratic members of the U.S. Senate immediately praised the House’s strong bipartisan vote, pledging to follow up with action in the upper chamber of Congress.