Lawmakers aired their concerns on Thursday about the upcoming release of the Department of Labor’s fiduciary redraft and laid out their plans to ensure the next Congress keeps the current retirement planning tax incentives that allow Americans to save.
“I’m mindful of [the] DOL fiduciary rulemaking,” Rep. Richard Neal, D-Mass., told reporters after his remarks at the Insured Retirement Institute’s 2nd annual Champions of Retirement Security Awards event, held on Capitol Hill. “I don’t want new [DOL] regs that are onerous and burdensome.”
Neal, a member of the House Ways and Means Committee, along with Reps. Patrick Tiberi, R-Ohio, and Rush Holt, D-N.J., were the 2014 recipients of IRI’s Champions of Retirement Security Award.
Besides anticipating the release soon of a new Treasury and IRS rule on lifetime income, Holt said that he’ll be “keeping his eye” on the DOL’s fiduciary redraft release, which he said could come at “anytime.”
DOL has “been eager to do it [put out a rule reproposal] for two years,” Holt told reporters after his remarks.
During his remarks to IRI event attendees, Holt, who serves on the House Committee on Education and the Workforce but will not seek re-election in the next Congress, said DOL “has gotten into a mindset that they can’t shake.” Instead of asking how they can help “ill-prepared” Americans save for retirement, DOL “seems to be taking the approach of … saying how can we restrict as much information as possible.”
Holt told reporters after his remarks that DOL’s stance appears to be that “unless you have an [fiduciary] advisor, the advice is conflicted,” which Holt said he doesn’t believe is true. While “nobody wants retirees or investors to be hoodwinked or misled,” the DOL’s proposal seeks to restrict advice. “I want them [Americans] to get some advice so they can begin thinking about retirement.”
Labor Secretary Thomas Perez said in late October that DOL continues to “reach out to stakeholders” regarding the redraft of its rule to amend the definition of fiduciary under the Employee Retirement Income Security Act, and would refer only to the January redraft release date as cited in DOL’s regulatory agenda.
Neal told attendees during this remarks that he will continue to champion the savers tax credit as well as keeping retirement incentives intact. “We have to be vigilant [as retirement tax incentives] becomes a very easy revenue grab” for lawmakers, he said.
“I have seen nothing that’s going to change my mind about where we need to go,” in terms of keeping tax incentives, Neal said. “Inside the committee and outside the committee, I’m going to stick [with the notion] that we need certain tax preferences to incent people …to continue to save for retirement.”
Neal told reporters that he was “going to stay at” trying to insert auto-IRA language into legislation in the next Congress.
IRI released a report Thursday which found that putting off contributing to a retirement plan, even for a few years, could greatly reduce a worker’s retirement income. For instance, a worker contributing 10% of income annually to a retirement plan starting at age 35—rather than 30—would receive 11% less in annual retirement income. Over the course of a 25-year retirement, the reduced income would be $62,000.
But Neal lamented the fact that only half the people in the U.S. have a retirement plan.
Lynne Ford, executive vice president and head of distribution for Calvert Funds, who spoke on a panel at the IRI event, said that IRI will be encouraging members of Congress to reintroduce the five bills (two in the Senate and three in the House) that address Americans’ lifetime income needs.
The House bills are the Lifetime Income Disclosure Act, introduce by Holt as well as the Retirement Plan Simplification and Enhancement Act, introduced by Neal.
In the Senate, the bills are the Secure Annuities for Employee (SAFE) Retirement Act, introduced by Sen. Orrin Hatch, R-Utah; the Universal, Secure, and Adaptable (USA) Retirement Funds Act, introduced by Sen. Tom Harkin, D-Iowa; and the Retirement Security Act, introduced by Sens. Bill Nelson, D-Fla., and Susan Collins, R-Maine.