By Wire Reports InsuranceNewsNet
February 6, 2019
By Staff And Wire Reports
More U.S. workers would get opportunities to participate in
an employer-provided retirement under a bipartisan retirement security bill
introduced today in the U.S. House of Representatives.
The measure contains several provisions which the Insured
Retirement Institute (IRI) has long-supported and advocated for enactment.
Known as the Retirement Enhancement and Savings Act, the
bill was initially introduced in previous session. It was re-introduced by
Reps. Ron Kind, D-Wisc., and Mike Kelly, R-Pa., as the House Ways and Means
Committee conducted a hearing Wednesday on retirement security.
The bill contains several measures to help Americans by
expanding opportunities to save for retirement; increasing access to lifetime
income products; helping savers make more-informed decisions about their
finances for retirement and enhancing features of workplace retirement plans.
“Americans today face many challenges in saving for
retirement because they do not have the opportunities or access to do so
through a private sector workplace retirement plan,” said Wayne Chopus, IRI
president and CEO. “The enactment of RESA would go a long-way in helping
Americans to overcome the obstacles they now face in saving for their
retirement.”
RESA would remove restrictions on the types of employers
that can band together in a Multiple Employer Plan (open MEPs). Allowing small
businesses to band together to achieve economies of scale and to delegate to a
professional plan fiduciary responsibility for sponsoring the plan would
facilitate more employers offering a retirement plan to workers.
To help workers ensure that they do not outlive retirement
savings, RESA would expand access to lifetime income products provided by insurers
that meet certain existing regulatory requirements enforced by state insurance
regulators, such as capital and reserving standards.
A related technical provision will ensure the portability of
lifetime income products. Current law jeopardizes the guarantees associated
with those investments if their employer changes recordkeepers. RESA will
permit plan participants to preserve their lifetime income investments and
avoid surrender charges and fees.
Another provision will help savers make more-informed decisions
regarding their finances by providing lifetime monthly income estimates on
benefit statements. IRI research found that more than 90 percent of workers
want retirement income estimates and would find them helpful. More than 75
percent of workers said they would increase their savings level after seeing
these estimates.
Finally, RESA will increase opportunities for workers to
save by enhancing automatic enrollment and escalation features. Studies have
shown that automatic enrollment is extremely successful in getting more people
to save for retirement with participation rates at least 10 percentage points
higher in plans with automatic enrollment.
By removing the auto enrollment safe harbor cap and the cap
requiring automatic escalation of employee deferrals go no higher than 10
percent of employee pay, RESA will create more opportunities for Americans to
save more for their retirement.
“IRI is thankful to Reps. Kind and Kelly for their
leadership and commitment in pursuing legislation that will help more Americans
achieve a financially secure retirement,” Chopus said. “We believe the
enactment of RESA will provide Americans with common-sense measures to help
them address the challenges and overcome the obstacles they face as they plan
and save for their retirement.”
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