Life insurers are welcoming President Donald Trump’s new retirement security executive order — and hoping Congress will follow up by passing S. 2526, the Retirement Enhancement and Savings Act (RESA) bill.
S. 2526 includes a fiduciary safe harbor provision that could help life insurers increase sales of savings annuitization products to retirement plan participants.
Susan Greenwell, a senior vice president at MetLife Inc., put out a statement calling the release of the executive order a “historic step towards expanding access to financial security in retirement for the 40 million Americans who work for small businesses.”
Alane Dent, a federal affairs staffer at the American Council of Life Insurers (ACLI), said in a statement of her own that the ACLI strongly endorses the executive order.
Greenwell and Dent said they are now hoping for quick congressional passage of S. 2526.
“The executive order plus passage of RESA by Congress this fall would signal to workers planning for retirement that policymakers are helping Americans build their retirement security,” Dent said.
The Executive Order
In the new executive order, which was issued Friday, Trump calls for:
- The U.S. Treasury Department and the U.S. Labor Department to make it easier for small businesses to join together to offer “multiple employer plans,” or MEPs.
- The Treasury and Labor departments to ease retirement plan recordkeeping and notice requirements.
- Treasury officials to update required minimum distribution rules.
S. 2526 was introduced by Sens. Orrin Hatch, R-Utah, and Ron Wyden, D-Ore., in March.
The bill, which is a similar to a bill that received unanimous approval from the Senate Finance Committee in September 2016, includes provisions that could:
- Clear statutory obstacles to employers participating in MEPs.
- Require a retirement plan statement to include an illustration showing the participant what kind of guaranteed lifetime retirement income payments the participant’s account could produce.
- Create a fiduciary safe harbor for a plan sponsor that chooses a guaranteed lifetime retirement income contract provider.
Some life insurers have argued that a fiduciary safe harbor could lead to a dramatic increase in the number of sponsors of 401(k) plans and similar plans that offer a savings annuitization option within the plan.
More information about the bill, including a link to the text, is available here.
— Read Senators Reintroduce Retirement Enhancement and Savings Act, on ThinkAdvisor.