Editor’s Note: In recognition of the Memorial Day holiday, IRI’s GAU Newsletter will not be published on May 31. Publication will resume on June 7.


Bipartisan Senate Legislation Introduced Last Week

Senators Ben Cardin (D-MD) and Rob Portman (R-OH) reintroduced S. 1770, the Retirement Security and Savings Act, last Friday, and Senators Chuck Grassley (R-IA), Maggie Hassan (D-NH), and James Lankford (R-OK) reintroduced the Improving Access to Retirement Savings Act, last Wednesday. Both bills build on the Setting Every Community Up for Retirement Security Act and contain provisions from IRI’s 2021 Federal Retirement Security Blueprint that will, among other improvements, boost savings opportunities in employer-sponsored retirement plans, improve access to guaranteed lifetime income products, encourage nonprofits to offer retirement plans, and clarifications to the credit for small employers starting a multiple employer plan (MEP) or a pooled employer plan (PEP). These provisions were also contained in H.R. 2954, the Securing a Strong Retirement Act of 2021, which passed unanimously out of the House Ways and Means Committee on May 5.

The Retirement Security and Savings Act includes measures to increase the age at which required minimum distributions must be taken, enhance automatic enrollment and escalation features, and provide those with student loan debt an opportunity to save while paying off their loans. The bill also facilitates the use of exchange-traded fund (ETF) investments in variable annuities, enhances the start-up credit to encourage more small businesses to offer workplace plans, allows for a broader use of qualified longevity annuity contracts (QLACs) to ensure individuals have sustainable income during their retirement years, and increases retirement catch-up contribution limits for Baby Boomers. In a press statement, Senator Cardin said, “Americans need to save more so they can retire with the dignity and stability they deserve. It’s an ongoing struggle, especially during the pandemic when millions of Americans were without work for months or longer and small businesses struggled to make ends meet. In his press statement, Senator Portman said, “this bill focuses on expanding access to retirement plans for low-income Americans and helping those who already have them save more for their retirement. I look forward to working with Senator Cardin, Chairman Wyden, and Ranking Member Crapo to move this legislation through the Finance Committee and urge all of my colleagues to support this bipartisan bill so we can strengthen the retirement security of all Americans.”

The Improving Access to Retirement Savings Act authorizes the formation of 403(b) pooled employer plans (PEP). The bill also clarifies that the eligibility period for the plan start-up tax credit for small businesses who join a PEP is applicable for the first three years of participation in the plan and not when the plan begins. In a statement, Senator Grassley said, “this legislation will help more Americans save for their retirement while also giving our small businesses and nonprofits another avenue to invest in their employees’ future financial security.” Senator Hassan noted the common-sense nature of the provisions of the bill and stated that “no American should have to worry about affording retirement after a lifetime of work.” Senator Lankford also hit on the importance of the bill in providing greater access to retirement savings by “making sensible updates to the law, this legislation makes it easier for small businesses and nonprofits to offer plans and expand access.”

IRI issued press releases (Grassley/Hassan/Lankford) (Cardin-Portman) upon the introduction of both bills, which highlighted IRI’s support for the bills as expressed in letters of support (Grassley/Hassan/Lankford)  (Cardin-Portman) IRI submitted to the sponsors of both bills. IRI anticipates the Senate Committee on Finance will convene a hearing on retirement security in July and advance bills alongside other proposals to be introduced in the coming weeks. IRI will be conducting outreach on Capitol Hill urging action on the legislation.

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

President Biden Issues Executive Order on Climate-Related Financial Risk

Last week, President Biden issued an Executive Order on Climate-Related Financial Risk. The Executive Order reaffirms the Administration’s direction to the DOL to reexamine certain Trump Administration financial regulations related to investment selection policies and procedures, along with related proxy voting rules. The so-called “ESG Rule,” formally known as “Financial Factors in Selecting Plan Investments”, requires retirement plan fiduciaries to abide by the “pecuniary” standard. Early in the new Administration, DOL confirmed a non-enforcement statement on the ESG Rule. Biden’s Executive Order gives the DOL until September to “consider publishing … for notice and comment a proposed rule to suspend, revise or rescind” the so-called “ESG Rule.”

Further, IRI recently received a message from the Acting Assistant Secretary of the DOL’s Employee Benefits Security Administration (EBSA) confirming that this Executive Order reinforces the priority of the DOL’s efforts to reexamine the ESG Rule and the correlated Proxy Voting Rule. In his message, EBSA’s Acting Assistant Secretary invited IRI and our sister trades to continue to engage with them as they move forward with this effort.

Any questions should be referred to Emily Micale.


SEC’s Chair Gensler Comments on Reg BI at FINRA’s Annual Conference

SEC Chair Gary Gensler participated in a fireside chat with FINRA President and CEO Robert Cook as part of the FINRA Annual Conference this week, and in his opening remarks, Gensler laid out his overarching perspective on Reg BI: “[B]est interest means best interest…[I]f you’re asking a lawyer, accountant, or adviser if something is over the line, maybe it is time to step back from the line. Remember that going right up to the edge of a rule or searching for some ambiguity in the text or a footnote may not be consistent with the law and its purpose…[T]hink about the spirit of the law. It’s about protecting investors.”

These comments suggest that Gensler may not have a predisposition to overhauling Reg BI (despite the wishes of fiduciary advocates and consumer groups). Instead, it appears from these comments that Gensler does intend to focus on strict enforcement of Reg BI as currently written, while preserving the option to make adjustments to the rules as necessary to ensure that investors are being effectively protected. IRI member companies are encouraged to contact any member of the IRI team if we can provide any support or assistance in connection with your Reg BI compliance efforts.

Any questions should be referred to Emily Micale.



Financing Infrastructure the Focus of House and Senate Committee Hearings

The House Committee on Ways and Means and the Senate Committee on Finance held hearings last week to discuss options for financing the infrastructure projects proposed by the Biden Administration. While members in both the Ways and Means and the Senate Finance hearings did express differences on potential tax increases to fund infrastructure, both the Build America Bonds program and the proposed American Infrastructure Bond programs were lauded by Members and witnesses for their ability to attract private-sector investment for public infrastructure. IRI called for the creation of opportunities for the use of Build America Bonds or American Infrastructure Bonds to support rebuilding infrastructure in the 2021 Federal Retirement Security Blueprint. IRI has also submitted letters of support for the American Infrastructure Bonds Act of 2021, introduced by Senators Michael Bennet (D-CO) and Roger Wicker (R-MS), and the Local Infrastructure Financing Tools Act, introduced by Representative Terri Sewell (D-AL). IRI will continue to monitor Congress for actions on establishing private-sector investment opportunities to help fund improvements to our national infrastructure.

Any questions should be referred to John Jennings.

HELP Committee Hearing to Confirm DOL Assistant Secretary for Policy

The Senate Health, Education, Labor, and Pensions Committee has scheduled a hearing on May 27, 2021, to consider the nomination of Rajesh Nayak to serve as the Department of Labor’s Assistant Secretary of Labor for Policy. At DOL, this position oversees an influential office responsible for supporting all the DOL subagencies in drafting regulations and coordinating with the White House to complete them. The office also acts as DOL’s primary liaison with the White House gatekeeper for rulemaking, the Office of Information and Regulatory Affairs in the Office of Management and Budget. Nayak served as a Labor Department political aide for most of the Obama Administration, including Deputy Assistant Secretary for Policy, as well as DOL’s senior counsel to the solicitor and as deputy chief of staff to then-Labor Secretary Tom Perez. Nayak is an advocate for progressive regulatory policy. Last year, he co-authored a paper in which he proposed overhauling the White House rulemaking review process to enhance regulatory capacity and give greater weight to inequality and worker interests when scrutinizing the need for agency rules.

Any questions should be referred to Paul Richman.

ESG Legislation Introduced in the House and Senate

Last week, the Financial Factors in Selecting Retirement Plan Investment Act of 2021 was introduced by Senators Tina Smith (D-MN) and Patty Murray (D-WA) and Representative Suzan DelBene (D-WA). The bill would, according to a fact sheet, amend ERISA to clarify that plans “may consider ESG factors in their investment decisions when they are expected to have an impact on investment outcomes, provided plans consider them in a prudent manner consistent with their fiduciary obligations. (this is the same standard ERISA applies to non-ESG investment factors), codify a longstanding principle that plans may consider ESG factors as tiebreakers when deciding between otherwise comparable options. The tie-breaker rule existed in DOL guidance or regulation for decades, in varying forms, until being largely repealed by the Department of Labor last year, and formally repeal last year’s Department of Labor rule on ESG investing, and limit future regulatory actions that impose unfair regulatory burdens in an effort to discourage ESG investing by ERISA plans.”

In a press statement, Senator Smith said, “Sustainable investment options are good for retirees and good for our environment—that’s a win-win. We’re putting forth this legislation because we know there’s a growing demand for sustainable investing, and because we believe Congress should act now to provide the legal certainty necessary to make sure workplace retirement plans are able to offer these options to workers across the country.” Senator Murray added, “retirement security is all about planning for the future—and you can’t truly do that if you aren’t able to consider the environmental, social, and governance factors that will shape the future. Allowing this approach isn’t just common sense, it’s a win for workers, retirees, investors, businesses, communities, the environment, and more.”

Any questions should be referred to John Jennings.



IRI Urges Kentucky to Adopt NAIC Best Interest Model Without Deviations

IRI testified this morning at a hearing on the pending proposal by the Kentucky Department of Insurance to adopt the NAIC best interest model regulation. After initially proposing to adopt the model without deviation, Kentucky was persuaded by other interested parties to remove the “best interest” terminology from the proposal. IRI presented arguments in support of restoring this important language on behalf of our members and our joint trades coalition partners.

We emphasized the fact that “best interest” has been included in the final laws and rules already adopted in all eleven states that have taken action on the model, and that Alabama recently revised its proposal to restore the “best interest” language after significant concerns were raised by IRI and numerous other industry groups. In addition to highlighting the fact that Kentucky would be an outlier if it proceeded in this manner, we explained how the removal of this important term could expose Kentucky consumers to significant risk as compared to residents of other states where the model is adopted without this problematic deviation.

The Department did not make any firm commitments during the hearing but did indicate that they would let us know their decision on the issue in the coming days. We will keep you apprised as this situation continues to develop.

Any questions should be referred to Jason Berkowitz.

Indiana Names New Commissioner of Insurance

Amy Beard has been appointed to serve as Commissioner of the Indiana Department of Insurance (IDOI). Beard has served at the IDOI for 8 years, including 5 years as the Department’s General Counsel. In a press statement, Indiana Governor Eric Holcomb said, “Amy has the right skill set, experience and dedication to provide great government service to Hoosiers as they purchase insurance that they need to protect their properties and families. Her experience at IDOI has been broad, from her work with the Indiana Patient’s Compensation Fund and on legislative issues, to her command of the required legal and financial filings of insurance holding companies.”

Beard replaces former Commissioner Stephen Robertson following his eleven-year tenure. IRI staff is conducting outreach to Beard.

Any questions should be referred to Jason Berkowitz.

NAIC Finalizes FAQs On Best Interest Model Regulation


Last week, the NAIC Annuity Suitability Working Group completed its work on an initial set of frequently asked questions related to the best interest model regulation adopted by the NAIC in February 2020. Access to the NAIC’s final FAQs is available here. Procedurally, the final FAQs must now be considered and approved by the Life Insurance and Annuities (A) Committee, which has not yet scheduled a call or meeting for that purpose.


These FAQs are intended and designed to assist states as they assess whether and when to adopt or enact the model. Therefore, the FAQs do not specifically address all of the issues on which guidance may be needed as the industry implements the model across the states. In particular, IRI (speaking for itself and the joint trades coalition IRI has been leading) has undertaken significant efforts to advocate for adoption of FAQs as to the meaning and operation of the comparable standards safe harbor. The NAIC working group has committed to continuing its efforts with an eye towards addressing this and other compliance issues that may arise.


Any questions should be referred to Jason Berkowitz.

SEC & FINRA Discuss Approach to Upcoming Reg BI Exams

At a recent session during FINRA’s Annual Conference, senior officials from both SEC and FINRA set forth their intended areas of key focus with respect to the next phase of Regulation Best Interest exams going forward.

Pete Driscoll, director of the SEC’s office of compliance inspections and examinations said “[i]t’s early stages for our phase two, but I will say these are much more in-depth exams looking at a lot of the trading, a lot of the recommendations.” Mr. Driscoll affirmed that the SEC will “continue to focus on policies and procedures and the effectiveness as well as the alteration of firm product offerings.” In his statements at the conference, Mr. Driscoll stated the SEC will also assess cost considerations in making recommendations, related documentation of the consideration of cost, an emphasis on firm processes and supervision of personnel.

As for FINRA, its senior vice president for member supervision, William St. Louis set forth “FINRA will focus on questionable recommendation activities and how they are being flagged and reviewed.” Further, Mr. St. Louis stated that “FINRA will also scrutinize potential conflicts of interest…”, and “[A] lot of firms set up conflict committees or did a conflict review but looking for conflicts or reacting to conflicts is not a one-time event; this should be ongoing effort.”

Any questions should be referred to Emily Micale.