Rep. Ron Kind, D-Wis., and Rep. Mike Kelly, R-Pa., reintroduced last session’s Retirement Enhancement and Savings Act during a lengthy early February House Ways and Committee hearing packed with ideas for fixing America’s retirement savings problems, both public and private.
The committee put a marker down on retirement savings action during its first hearing in the new Congress, placing a bipartisan support for some legislative action on private and public savings vehicles, including RESA.
“As a nation, we have a problem when it comes to retirement savings. We need to take common-sense steps to ensure our businesses are offering their employees flexible retirement plans that set our workers up for success in their golden years,” Kind said in a statement.
RESA would ease federal tax barriers allowing access to retirement savings through employer-provided retirement plans by making it administratively easier and less financially onerous for employers to create multiple employer plans.
Retirement savings plan auto-enrollment would increase under RESA’s provisions. The bill also has an education component.
As envisioned, RESA also would permit the portability of lifetime income products and preserve the income guarantees associated with those investments.
The enactment of RESA “would go a long way in helping Americans to overcome the obstacles they now face in saving for their retirement,” stated Insured Retirement Institute President and CEO Wayne Chopus. MassMutual Chairman and CEO Roger Crandall voiced his support for RESA in testimony before the committee, noting that currently, the expense for small companies of setting up plans “is real.”
Crandall championed the proposed tax incentives he said would help offset the costs associated with establishing a new workplace retirement plan.
He also embraced RESA’s provision to encourage lifetime income for workers by making these plans more portable and allowing safe harbor protections for business that include lifetime income solutions in their plan.
However, MassMutual, fellow witnesses and the full committee all looked beyond one legislative act to an embrace of a multiple actions and reforms to make sure people had enough money at retirement.
Diane Oakley, executive director of the National Institute on Retirement Security, told lawmakers she was concerned that only one-third of millennials have money saved for retirement even though young people often have access to employer savings plans.
Crandall said he strongly supports more legislation to promote workplace retirement plans and personal retirement savings, pointing to the Retirement Plan Simplification and Enhancement Act of 2017 introduced in the 115th Congress by now-Committee Chairman Richard Neal, D-Mass.
Neal raised the possibility of legislative activity on another former bill, the Butch Lewis Act, before end of the year. According to a text of the proposed bill, which was active in both chambers in 2017 and 2018, employer plans with defined benefit offerings could get loans from a new entity called the Rehabilitation Trust Fund, part of a proposed Pension Rehabilitation Administration within the Treasury Department.
By far, the lengthy hearing focused most of its time discussing and debating how to fix Social Security, whether by cutting benefits or raising taxes. Most witnesses supported raising benefits and finding ways to pay for it.
Lawmakers of both parties lauded the work of Rep. John Larson, D-Conn., on the Social Security 2100 Act and pledged bipartisan support for strengthening Social Security and addressing its solvency.
Elizabeth Festa is a longtime business and financial services reporter with a specialty in insurance regulatory and legislative coverage at the federal and state level. She is based in Washington, D.C.