Members of the House and Senate have put forward many ideas for modernizing the laws governing retirement plans, but so far they have failed to achieve the sweeping reform that has been discussed over multiple Congresses.
During a meeting of the Senate Finance Committee on Tuesday, Committee Chairman Chuck Grassley said that passage of the Retirement Enhancement and Savings Act (RESA) remains a top priority for himself and Finance Committee Ranking Member Ron Wyden.
In his comments opening the meeting, Grassley called on the House to send its version of RESA to the Senate for reconciliation, but at this juncture, the most likely route for RESA’s many provisions to make it into law could instead be via the SECURE Act, which has already been approved by the House Ways and Means Committee and mirrors much of RESA.
As shown on the House’s legislation tracking website, the lower chamber’s version of RESA was last addressed on February 6th, when the bill was referred to both Ways and Means as well as the Committee on Education and Labor. The referral was open-ended and will last “for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the Committees.”
Encouraged by the fact that the SECURE Act zipped through the Ways and Means Committee in less than a week, sources engaged in retirement industry lobbying say they cautiously expect full House passage of the SECURE Act potentially within the month. If or when the SECURE Act advances through the House in this session, it would then remain to be seen whether Republican leadership in the Senate would agree to work within the SECURE Act’s framework, as opposed to the RESA legislation.
While the path ahead remains uncertain, industry advocates say the opportunity for rectifying one or more these bills is supported by the fact that both the SECURE Act and RESA (and various other bills pending in Congress) enjoy broad support from the retirement plan and asset management industries—and from more grassroots advocates, including independent small-business owners, members of the gig economy and part-time workers. However, another variable thrown into the mix this week was the reintroduction by U.S. Senators Rob Portman, R-Ohio, and Ben Cardin, D-Maryland, of the Retirement Security & Savings Act (RSSA), which they describe as a broad set of reforms designed to strengthen Americans’ retirement security. Like the SECURE Act, the bill echoes key provisions of RESA.
Industry Urges Progress, Not Just More Bills
In public comments issued this week, retirement industry providers say they support any sensible legislation that will make it easier for more employees to access high-quality retirement plans at work. They urge the Senate and House to take advantage of the fact that a critical bipartisan mass of lawmakers has publicly and consistently voiced support for bills like RESA and the SECURE Act.
“We commend Senators Portman and Cardin for introducing a bipartisan bill that includes so many common-sense changes to current law that improve individuals’ ability to save for retirement,” said Robert Higginbotham, head of global distribution at T. Rowe Price. “Among many other things, it encourages sponsors to adopt automatic contribution plans with higher contribution rates, simplifies disclosures, and allows individuals saving through large 403(b) plans to enjoy the same lower costs that participants in larger 401(k) plans enjoy through the use of collective trusts. For the benefit of the millions of Americans who save and invest for their retirement, we urge Congress to clear the way for the passage of this important bill.”
Wayne Chopus, Insured Retirement Institute president and CEO, expressed strong support for RESA and urged the Senate to quickly advance the measure and then begin working with the House to approve a final version for President Trump’s signature.
“The House and Senate legislation are close to identical and both chambers would likely need only a short time to work together to resolve their differences and finalize a bill for the president,” Chopus added. “IRI is grateful to Chairman Grassley and Senator Wyden for their commitment and leadership to help improve the opportunity for millions of American workers to achieve a financially secure and dignified retirement.
Chpous said both RESA and the SECURE Act would remove critical barriers that discourage small business employers from banding together in an open multiple employer plan (MEP) to achieve economies of scale and delegate responsibility for sponsoring the plan to a professional plan fiduciary, thereby facilitating the offering of a retirement plan to their workers.
“To help workers ensure that they do not outlive retirement savings, the measures clarify fiduciary responsibilities of employers that will allow them to make lifetime income products available as an option within their retirement plan,” Chopus said. “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 and the SECURE Act will permit plan participants to preserve their lifetime income investments and avoid surrender charges and fees.”
Chopus and other advocates highlight that both bills will help savers make more-informed decisions regarding their finances by providing lifetime monthly income estimates on benefit statements. Further, the bills will increase opportunities for workers to save by enhancing automatic enrollment and escalation features.