Helping workers save for retirement on the job should help improve those workers’ ability to plan, save and invest for retirement on their own.
Phil Waldeck, president of Prudential Financial Inc.’s Prudential Retirement, made that case today in an interview.
Prudential has been one of the financial services companies putting its policymaking muscle behind supporting passage of H.R. 1994 — the Setting Every Community Up for Retirement Enhancement Act of 2019, or SECURE Act bill. The company has also been supporting passage of the major Senate retirement bill, S. 972, the Retirement Enhancement and Savings Act bill or RESA bill.
Members of the House passed H.R. 1994 by a 417-3 vote Thursday. The Senate is now preparing to consider S. 972, which has support from key Senate Democrats as well as from Senate Republicans.
Some of the many provisions in the bills could help small employers join together to offer coverage through multiple employer retirement plans; give employers that choose retirement plan annuitization option providers some protection annuitization provider-related lawsuit risk; and increase the required minimum distribution age for retirement account assets to 72, from 70 1/2 today.
Waldeck said that he believes that implementation of either bill could help many more U.S. workers save for retirement.
Groups like the National Association of Insurance and Financial Advisors, AALU and the National Association of Independent Life Brokerage Agencies brought members to Capitol Hill to support passage of the bills, and to explain the provisions to lawmakers and congressional aides.
Retail life insurance agents might be supporting the SECURE Act and RESA Act bills for the good of the workers, but they might have still had some concern about what stronger employer-sponsored retirement plans could do to the sales of annuities and life insurance products used in individual income retirement savings and income planning efforts.
Waldeck said the real problem is the many Americans who have no retirement savings at all.
“That’s a really, really big number,” Waldeck said.
Implementation of either the SECURE Act bill or the RESA bill “is going to make the retirement pie much bigger,” he said.
Waldeck cited an illustration provision in the bills, which would require a retirement plan sponsor to give the participants notices showing how much retirement income the participants’ accounts might produce, as an example of a change that could increase workers’ overall interest in retirement planning.
“That’s going to create a retirement income orientation,” Waldeck said.
Waldeck said he hopes agents will continue to stay involved. “I would encourage them to encourage their legislators to support the bill,” he said. “To the extent their voices are heard, that’s helpful.”
Here are three more things Waldeck said about the retirement bill fight:
1. He likes both the SECURE Act bill and the RESA bill.
“Both are responsible and attractive means to advance retirement security,” he said.
2. The 417-3 vote in the House was great.
“It’s energizing to see such strong, bipartisan support,” Waldeck said. “There’s common ground here.”
3. Supporters need to be patient.
Even if one of the bills, or a combination of both, becomes law quickly and works as supporters hope, the new law likely would not take effect until Jan. 1, 2022, at the earliest, Waldeck said.
Once new products and options were available, employers would need time to decide what to do and to act on those decisions, Waldeck said.
— Read Waldeck to Lead Prudential Retirement on ThinkAdvisor.