Editor’s Note: In recognition of the Independence Day holiday, IRI’s GAU Newsletter will not be published on July 5.


House Committee Examines Retirement Security, IRI Issues Statement for the Record

The House Education and Labor Subcommittee on Health, Education, Labor, and Pensions held a hearing on June 23 to examine pathways to building a stronger, more inclusive retirement system. At the hearing, the Subcommittee heard testimony from witnesses about the SECURE 2.0 legislation, that passed unanimously out of the House Committee on Ways and Means in May. The Subcommittee has jurisdiction over several of the measures in the bill that are governed by ERISA. At the hearing, the Subcommittee Chairman Rep. Mark DeSaulnier (D-CA) stated, “today’s hearing is not about past action; it’s about the present state of the private sector retirement and what we need to do in the future to make it stronger and more inclusive. I’m certain we all believe that Americans after a hard-working life deserve to retire in some level of security.” The Chairman also said the full committee is expected to consider the SECURE 2.0 bill later this summer. The Subcommittee’s Ranking Member, Representative Rick Allen (R-GA), noted the importance of access to defined contribution retirement plans and his belief that Congress should act on retirement security, stating, “I see room for bipartisanship and commonsense policy updates, and this committee must lead the way in working together to expand on the SECURE Act and ensure that Americans are secure in their retirement […] As this Committee considers updates to ERISA, we must focus on expanding access to defined contribution plans, increasing retirement options for employees of small businesses, making plans more transparent, and eliminating the need for future taxpayer-funded bailouts of special interests.”

IRI submitted a statement for the hearing’s record expressing support for the 2021 Federal Retirement Security Blueprint measures included in the “Securing a Strong Retirement Act of 2021.” These include enhancing retirement savings opportunities for employees of nonprofits, public educational organizations, and religious institutions by using pooled-employer plans and establishing a way for plan participants to more readily obtain information about past and possibly forgotten retirement accounts. Additionally, IRI took the opportunity presented by the hearing to suggest the Subcommittee consider several other Blueprint measures as they consider the SECURE 2.0 legislation. IRI suggested including measures to remove the annual statement requirement included in the House version of SECURE 2.0 and instead authorize e-delivery as the default option for plan statements and notifications; require retirement savings education as an element of federal student loan borrowers’ exit counseling programs and extending this counseling to recipients of federally funded job training and apprentice programs; lift the current Department of Labor regulatory barrier, which now prevents annuities from being offered as a default investment option (QDIAs) in workplace retirement plans; and clarify that the offering and selling of general account products would not trigger fiduciary status to ensure that retirement savers can continue to access these valuable protected lifetime income products to achieve their retirement goals.

Any questions should be referred to Paul Richman or John Jennings.


Report Accompanying SEC Appropriations Calls for New RILA Form

The report accompanying the House’s Fiscal Year 2022 (FY2022) funding legislation for the Securities and Exchange Commission (SEC) will again contain language calling on the Commission to create a tailored form for registered index-linked annuities (RILAs). The report language is the same that was included in the SEC’s FY2021 Appropriations legislation which states “The Committee is concerned that the current registration process for registered index linked annuities (RILAs) is cumbersome and requires significant information not needed for other registered insurance products. The Committee encourages the SEC to create a tailored filing form for RILAs.” Committee reports accompany legislation and contain information about the measure, votes, and policies. Often, the report includes language expressing the desire of committee members for agencies to act on specific policies. While it does not have the force of law, report language signals the committee’s interest and concern and serves to identify issues for congressional oversight of an agency’s actions.

The IRI led RILA coalition continues to advocate for the reintroduction of Registration for Index Linked Annuities Act. The bill would require the SEC to create a new registration form more closely tailored to RILAs than the forms currently being used to register these products. IRI will continue to monitor Congress for actions related to RILAs and other 2021 Federal Retirement Security Blueprint priorities.

Any questions should be referred to Paul Richman.


SECURE Notarization Act Introduced in the House

Representatives Madeleine Dean (D-PA) and Kelly Armstrong (R-ND) introduced the Securing and Enabling Commerce Using Remote Electronic (SECURE) Notarization Act last week. The bill would authorize all notaries in the United States to preform “Remote Online Notarizations” (RONs) by establishing minimum standards for the use of “tamper-proof” technology and multifactor authentication. In a statement, Representative Dean said, “COVID-19 made it clear that certain methods needed to be updated to keep up with our ever-changing world and economy. One of the areas that this was most prevalent was our notarization process passing legislation like the SECURE Notarization Act allows us to do just that.” Representative Armstrong, in his statement, said, “Remote online notarization offers consumers a convenient way to safely and securely complete documents. Our bipartisan bill will permit nationwide use of remote online notarization, increasing access to this important process.” The bill is currently cosponsored by 30 bipartisan Members of Congress. A companion bill was introduced in the Senate by Senators Kevin Cramer (R-ND) and Mark Warner (D-VA) earlier this month.


Any questions should be referred to John Jennings.



DOL Auditing Cybersecurity Programs of Retirement Plans, Sponsors, and Fiduciaries

According to several recent trade press reports and law firm alerts, the Department of Labor (DOL) has been reviewing and auditing the cybersecurity programs of an increasing number of ERISA plans, sponsors, and fiduciaries. These audits are likely a result of the well-publicized cybersecurity attacks on other industries in recent months that have led the Biden Administration to make cybersecurity a high-level national security priority.

The DOL has not undertaken any formal notice-and-comment rulemaking to solicit public input on this effort or to provide plans, sponsors, and fiduciaries to prepare for audits of their cybersecurity programs. However, the DOL did issue Cybersecurity Guidance in April 2021 that identified best practices and technical tips for financial professionals, plan sponsors, and fiduciaries in three categories: Cybersecurity Program Best Practices, Tips for Hiring a Service Provider, and Online Security Tips. In issuing this guidance, the DOL expressly noted that plans, sponsors, and fiduciaries have an affirmative obligation to mitigate cyber risks, but the guidance did not expressly state or even imply that the steps outlined in the guidance were mandatory.

IRI members are encouraged to reach out to us for support or assistance in terms of advocacy, compliance, messaging, or otherwise. Looking ahead, we will continue to monitor and keep members apprised of notable development related to cybersecurity generally or the DOL’s audits in particular.

Any questions should be referred to Emily Micale.

NAIC Best Interest Model Adopted in Maine and Virginia, Proposed in Pennsylvania

Maine and Virginia have now joined the list of states to officially adopt the NAIC best interest model, bringing the total number of states up to 15. Maine’s final rule is available here and will take effect on January 1, 2022, and the Virginia rule can be accessed here and will go into effect on September 1, 2021. In both states, producers licensed after the effective date will have to complete the required training before selling annuities, while existing producers licensed before the effective date will have six months to complete the training. Both states revised their proposals in accordance with comments submitted by IRI.   

A new proposal to enact the model was introduced last week in Pennsylvania. Senate Bill 772 can be accessed here and is largely consistent with the model, though a few relatively minor changes are needed to ensure full alignment. The bill was quickly passed by the Senate before the Summer recess, and the House is expected to take the bill up in the Fall.  

Lastly, the NAIC Life Insurance and Annuities (A) Committee will hold a call on July 19 to consider adoption of the FAQs recently finalized by the Annuity Suitability Working Group, which is available here, and interested parties can attend the call by clicking here.

Any questions should be referred to Jason Berkowitz.