Life and annuity groups are celebrating the possibility that they might be able to get H.R. 1994 — a modest package of retirement savings changes — all the way through Congress, and onto the desk of President Donald Trump.
Partisanship slowed progress early Thursday. Some Republicans tried to keep the current version of the Setting Every Community Up for Retirement Enhancement Act (Secure Act) bill from coming up for a vote on the House floor. A motion to send H.R. 1994 back to congressional committees for more work failed by a fairly close, 200-222 vote.
Republican House members voted 188-12 to send the bill back to the committees.
(Related: House Passes Secure Act Retirement Bill)
But Democrats voted 220-2 to go ahead with consideration of the bill.
Once the bill actually came up for formal debate, the bill received overwhelming support. House members passed the bill by a 417-3 vote. The only lawmakers who voted against the bill were Rep. Justin Amash, R-Mich.; Rep. Thomas Massie, R-Ky.; and Rep. Chip Roy, R-Texas.
For consumers, the most noticeable provision may be one that would increase the required minimum distribution age to 72, from 70 1/2 today.
For employers, the key provisions may be ones that would help small employers join together to offer retirement plans, and that would increase the retirement plan auto-enrollment safe harbor cap to 15% of the participant’s pay, from 10% today.
For insurers, the key provision may be out that would create a safe harbor, or buffer against some lawsuits, for an employer that chooses a specific company to provide a lifetime income option, or annuitization option, for the plan participants.
The “Fiduciary Safe Harbor for Selection of Lifetime Income Provider” provision in Section 204 of the version of the bill that the House passed would apply to an employer that used a careful approach to pick a good annuitization option provider. The sponsor would not have a responsibility “for any losses that may result to the participant or beneficiary due to an insurer’s inability to satisfy its financial obligations under the contract,” according to the bill text.
An early provision, Section 203, would set pension benefit income statement lifetime income disclosure rules. If an employer provided a lifetime income forecast created using procedures required by federal regulators, along with standardized warnings provided by the Treasury secretary, an employer would not have any liability associated with the lifetime income stream forecast, according to the bill text.
The most important reactions to House passage of H.R. 1994 came from Senate Finance Committee Chairman Charles Grassley, an Iowa Republican, and Sen. Ron Wyden, D-Ore., the highest ranking Democrat on the committee: Both are celebrating passage of the bill.
Open bipartisan support for the bill in the Senate dramatically increases the odds the bill will get through the Senate, at a time when hostility between Republicans and Democrats is stalling passage of many other bills.
Here’s a look at some of what life, annuity and benefits organizations are saying.
American Council of Life Insurers
ACLI President Susan Neely said in a statement that House passage of the Secure Act bill is a sign that policymakers are moving past talk on retirement security to action, and that there will be momentum for Senate passage of the Senate version of the bill, the Retirement Enhancement and Savings Act bill, or RESA.
The Secure Act bill and the RESA bill would “make it easier for employers to offer workplace retirement plans with annuities that guarantee an income for life,” Neely said.
National Association of Insurance and Financial Advisors
NAIFA Chief Executive Officer Kevin Mayeux said in his statement that the Secure Act bill passed with overwhelming bipartisan support,.
“Just last week, nearly 600 NAIFA members met with more than 90 percent of congressional offices during NAIFA’s Congressional Conference and urged lawmakers to vote for the bill. It’s always satisfying to see results from our grassroots advocacy be realized so quickly. We look forward to this momentum carrying over to the Senate, where the bill is known as the Retirement Enhancement and Savings Act, and hope the legislation will soon be signed into law.”
AALU President Marc Cadin noted in a statement that his group recently sent 400 members to Capitol Hill to lobby for passage of the Secure Act bill, and the RESA bill.
“Americans are not saving enough today,” Cadin said in the statement. “They need more tools to help them save for retirement and put them on a path to financial security. The Secure Act is a critical step in doing that. As financial security professionals, our members help families and businesses meet their retirement goals and achieve financially sound futures, and we are committed to addressing the retirement savings gap.”
Insured Retirement Institute
IRI President Wayne Chopus said in a statement that small employers’ current inability to team up to offer multiple employer retirement plans contributes to the current retirement savings crisis.
“Today’s vote demonstrates how Congress can work together on a bipartisan basis to advance common-sense solutions to help retire the retirement crisis,” Chopus said.
National Association for Fixed Annuities
NAFA hailed passage of H.R. 1994 in a member alert.
“NAFA has worked diligently with fellow trade organizations and consumers groups to encourage congressional support for the act and secure its passage,” the group said in the alert. “We’re thrilled to see this victory for our members, all arms of annuity distribution and the American public.”
Prudential Financial Inc.
Prudential put out a statement applauding the House for advancing H.R. 1994.
Phil Waldeck, the president of the company’s Prudential Retirement unit, said the bill will make it easier for millions of Americans to save for retirement.
The bipartisan bill “is the most significant legislation aimed at bolstering America’s retirement system in more than a decade,” Waldeck said. “To keep this momentum going, we strongly urge the Senate to move swiftly on retirement security and pass this important legislation.”
The official tracking page for the RESA bill, H.R. 1007, is available here.
— Read AALU Members Moved, and Shook, on ThinkAdvisor.