The U.S. Congress has crafted a bipartisan 2020 appropriations package that would avoid a government shutdown and provide a combined $1.4 trillion for fiscal year 2020 across military and civilian departments, and on Tuesday, the House passed the Fiscal Year 2020 Consolidated Domestic and International Assistance Package (H.R. 1865), which includes the Setting Every Community Up for Retirement Enhancement Act, affectionately known as the “SECURE Act.”
The SECURE Act has been the subject of intense lobbying efforts by the retirement plan industry and consumer groups who share the desire to expand and further modernize the defined contribution (DC) plan landscape. While at this stage the SECURE Act’s provisions have yet to officially become law, its supporters say they expect the spending package to be passed by the Senate and signed by the President by end of this week.
“The SECURE Act is an important piece of legislation that helps small businesses provide robust benefits for their employees and gives Americans incentives to take responsibility for their retirement financial security,” says Kevin Mayeux, CEO of the National Association of Insurance and Financial Advisors, responding to the news that the legislation has been folded into the near-complete budget negotiations. “It makes a nice holiday gift from Congress to American employers and workers.”
Among the SECURE Act’s main provisions, it would expand the opportunity for employers to join “open multiple employer plans,” or “open MEPs”; encourage the availability and the portability of annuity options within retirement plans; require retirement plan providers to annually disclose the monthly lifetime income value of retirement accounts; provide employers with tax credits for starting plans and for automatically enrolling workers into retirement plans; and allow long-term, part-time workers better access to employer-provided retirement plans.
News that the SECURE Act’s provisions may soon become law caps off a year of intense lobbying efforts, spearheaded by recordkeepers, advisory firms and investment managers, particularly those with an interest in selling lifetime income solutions and annuities. Recently, a group of more than 90 CEOs and senior executives from leading American corporations and business groups issued a public letter calling on the U.S. Senate to pass the SECURE Act. Their plea, addressed both to Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer, came some six months after the U.S. House passed its version of the SECURE Act with a nearly unanimous and bipartisan vote.
“We commend Congress on the inclusion of the Setting Every Community Up for Retirement Enhancement Act’s provisions in its appropriations package,” says Graham Cox, executive vice president and head of MetLife’s retirement and income solutions group. “This legislation removes the long-standing regulatory barriers that prevent companies from including lifetime-income options in their employees’ retirement plans.”
Cox believes the annuity selection safe harbor provision provided under the SECURE Act will increase workers’ access to solutions that will protect against the risk of outliving their savings.
“These provisions provide valuable tools that will strengthen retirement security for millions of Americans,” Cox concludes.
Assessing the likelihood of the appropriations bill become law this week, Wayne Chopus, president and CEO of the Insured Retirement Institute (IRI), says the odds appear good.
“We have a first down and goal on the 1-yard line,” Chopus suggests. “Congress and the President are about to deliver a meaningful, positive benefit to millions of American workers by expanding opportunities to save for and achieve a dignified retirement.”
Phil Waldeck, CEO of the workplace solutions group of Prudential Financial, agrees that odds of the appropriations bill becoming law this week are strong.
“It looks as if Congress will take bipartisan action to pass the SECURE Act before the holidays to help strengthen retirement security for millions of Americans,” he says. “The SECURE Act is the most significant legislation aimed at bolstering America’s retirement system in more than a decade. It provides for much needed access to workplace retirement plans, improved retirement savings, and guaranteed retirement income that cannot be outlived.”
American Council of Life Insurers (ACLI) President and CEO Susan Neely also lauded Congressional leaders for including the SECURE Act in the 2020 spending package, calling the package “the most sweeping retirement security legislation to move through Congress in more than a decade.”
“The SECURE Act makes important changes that will go a long way toward addressing the nation’s looming retirement crisis. One provision alone will get more than 700,000 small business employees nationwide to start saving for retirement,” she proposes.