ERISA’s industry committee released a letter to Congress that detailed its recommendations and views on a set of pension reform bills dubbed “SECURE 2.0.” In the letter, ERIC said it hopes to see a pension reform bill passed by the end of the year.
SECURE 2.0 refers to a bill passed by the House, called Securing a Strong Retirement Act, and two Senate bills that have passed their respective committees, but have yet to receive a full vote. The Senate bills are called the Enhancing American Retirement Now Act (EARN) and the Savings Enhancement to Supplement Healthy Investments for the Nest Egg Act (RISE and SHINE). All three bills aim to increase Americans’ access to retirement plans in a variety of ways.
The original SECURE Act was the Every Community Setting Up Retirement Enhancement Act of 2019.
The latest legislation aims to improve Americans’ ability to save for retirement. For example, provisions in the EARN and SSRA bills are intended to facilitate repayment and retirement savings for workers with student loan debt. The bills would allow workers to have their wages deducted to pay off their loans and have their employer match that amount as a pension contribution. ERIC supports this proposal and hopes to see a version of it in the final bill.
Another common obstacle to saving is worrying about needing money for an emergency, and not having it available quickly since he is in a retirement plan and subject to a tax penalty. for early withdrawal. The EARN, RISE, and SHINE bills have early withdrawal provisions that make it easier to withdraw money from a plan in certain situations. ERIC also supports this proposal.
The ERIC letter also supported simplifying the disclosure of fees and summary plan statements, as well as tax incentives for plan participation. He also backed a provision found only in the EARN bill that would allow overfunded pensions to use the extra money on health and life insurance benefits for participants in the scheme until 2032. The current expiry of this provision was set at 2025 by previous legislation.
All three bills allow well-funded plans to waive the clawback of overpayments if the overpayment is the fault of the retiree. ERIC hopes to see this provision in the final legislation.
A proposal missing from the three bills suggested by ERIC was for Congress to create a “lost and found” plan. Some employers have large and complicated pension plans and sometimes have trouble finding missing participants. He recommends that Congress require the creation of a database of retirement accounts so that workers and retirees can find their former employers and access their retirement funds.
The letter also expressed disapproval of SSRA Section 314 “which moves away from electronic delivery of plan information.” Section 314 of the SSRA requires that participants receive certain information in the form of paper documents from time to time.
Congressman Jim Himes, D-Connecticut, of the House Financial Services Committee, told a conference hosted by the Investment Adviser Association that he expects SECURE 2.0 to pass this Congress, most likely during the ‘lame duck’ period between November and January.
The full letter is available here.