30 May 2023

The Clock is Ticking on Retirement Security Bills, Industry Experts Say

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Lawmakers on both sides of the aisle are motivated to pass another major retirement security package in 2022, but with midterm elections looming in November, time is of the essence, retirement industry sources said.

Bipartisan bills were introduced in the House and Senate in 2021 that build on the Setting Every Community Up for Retirement Enhancement Act, known as the SECURE Act, which Congress passed and was signed into law in late 2019.

Sens. Rob Portman, R-Ohio, and Ben Cardin, D-Md., in May reintroduced the Retirement Security and Savings Act, which features more than 50 provisions aimed at getting people to save more for retirement. Provisions include increasing the tax credit for small business starting a new retirement plan, raising the "catch-up" contribution limits to $10,000 from $6,000 for individuals over 60 with 401(k) plans and allowing employers to make matching contributions to retirement accounts of employees paying off qualified student-loan debt.

"I have long championed retirement security legislation throughout my time in Congress and (in 2022) we have a great opportunity to give Americans more tools to have a safe and secure retirement," Mr. Portman said in a statement to Pensions & Investments. "Enacting the bipartisan Retirement Security & Savings Act will be a big priority and I will continue to work with my colleagues on both sides to make it happen."

Ways and Means Committee Chairman Richard Neal, D-Mass., and ranking member Kevin Brady, R-Texas — reintroduced and advanced the Securing a Strong Retirement Act of 2021 through their committee in May. The bill shares many provisions with the Portman-Cardin bill, but notably includes a provision that would require 401(k), 403(b) and SIMPLE IRA plans to automatically enroll participants upon becoming eligible. The bill's auto-enrollment provision initially enrolls participants at a floor of 3% of pay, and that contribution is then increased by 1 percentage point each year until it reaches 10%, unless the participant opts out.

In November, House Committee on Education and Labor Chairman Robert C. "Bobby" Scott, D-Va.; ranking member Virginia Foxx, R-N.C.; Health, Employment, Labor and Pensions Subcommittee Chairman Mark DeSaulnier, D-Calif.; and subcommittee ranking member Rick Allen, R-Ga., introduced the Retirement Improvement and Savings Enhancement Act, or RISE Act.

The Rise Act, similar in scope to the Securing a Strong Retirement Act, was advanced out of committee in November, but both bills — the likely basis for a SECURE 2.0 package — have yet to come before the full House for a vote.

"The Securing a Strong Retirement Act and other retirement measures, like the saver's credit and my automatic IRA proposal, remain key priorities of mine, and I'm determined to find opportunities to advance them in 2022," Mr. Neal said in a statement to Pensions & Investments.

When Democrats in the House were negotiating the Build Back Better Act in September, Mr. Neal proposed a provision to require that employers offer a 401(k) or individual retirement account, with exceptions for governments, churches and companies with five or fewer employees or less than two years in business. He also put forth a provision to make the saver's credit refundable, allowing people without any income tax liability to be eligible to receive the benefit in the form of a contribution to their retirement account. Both provisions advanced out of the Ways and Means Committee but were stripped from the bill before it ultimately passed in the House in November.


Passing a SECURE 2.0 package in 2022 will be a challenge.

"Whenever you're looking at congressional schedules, there's a large degree of uncertainty as to what's going to happen," said Bradford P. Campbell, a Washington-based partner for Faegre Drinker Biddle & Reath LLP and former assistant secretary of labor for the Employee Benefits Security Administration during President George W. Bush's administration.

A SECURE 2.0 bill is unlikely to get floor time in the Senate and passing it through unanimous consent — a fast-tracked process where no senator objects — is difficult, said Michael P. Kreps, Washington-based principal and co-chairman of the retirement services practice at Groom Law Group.

If a SECURE 2.0 bill were to pass, members in the House and Senate would likely work out some sort of compromise through an informal process and then attach the bill to a piece of must-pass legislation or a larger bill that's moving through Congress, Mr. Kreps said. The original SECURE Act was attached to a year-end spending bill in 2019.

Melissa Kahn, Washington-based managing director of retirement policy for State Street Global Advisors' defined contribution team, is optimistic a SECURE 2.0 bill will pass in 2022, but said getting it done before Congress' August recess is crucial because legislative business tends to slow down before a midterm election.

Mr. Campbell made a similar point and said that while the second half of 2022 will likely have fewer floor days in Congress and more time allocated to campaigning, the midterm elections could be a motivating factor to pass bipartisan legislation like a SECURE 2.0 package. "Congress would like to have some bipartisan achievements to point to so they can go back home and say they can work together; it's not all gridlock and problems," he said.

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