TOP NEWS

Neal’s Auto Retirement Plan Bill Advances; Lifetime Income Provision Included

Last week, the House Committee on Ways and Means began its mark up of the Reconciliation Bill and approved a measure (Subtitle B – Retirement) that will require companies with five or more employees to offer and automatically enroll those employees in an IRA or retirement plan. The measure also includes a provision requiring that retirement plan participants be offered the opportunity to elect a lifetime income distribution of up to 50 percent of their account balance (for accounts with balances greater than $200,000). The Committee also approved a measure to make the Saver’s Credit refundable so that those without any income tax liability receive a benefit and require the credit amount to be contributed directly to a tax-favored retirement account to act as a matching contribution. The measure passed out of committee by a vote of 22 – 20.

IRI has long supported the Auto IRA/Retirement Plan measure championed by Chairman Richard Neal (D-MA) and included a call for its passage in the 2021 Federal Retirement Security Blueprint. Before the start of the markup, IRI submitted a letter of support to the Chairman. We also shared our letter with members of the Committee, calling for them to vote in favor of the bill. Our letter also highlighted how the legislation aligns with two of IRI’s top advocacy priorities: (1) expand opportunities to save for retirement by enhancing access to, and features of, workplace retirement plans, and (2) facilitate and expand the use of protected lifetime income to produce sustainable income during retirement. In a press release, IRI President and CEO Wayne Chopus reiterated IRI’s support for the proposal, saying, “This legislation will have a significant, positive effect on the long-term well-being of millions of small-business workers who will now have more opportunities to save for and achieve a secure and dignified retirement with income to sustain them throughout their retirement.”

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

 

Ways and Means Announces Revenue Raisers for Reconciliation Package

This morning, the House Committee on Ways and Means announced proposed tax increases to raise the revenue needed to fund the programs outlined in the Reconciliation Bill. According to documents circulated publicly, House Democrats are seeking to raise the corporate tax rate from 21 percent to 26.5 percent. The top individual income tax rate would rise to 39.6 percent, and a 3 percent surtax would be imposed on individuals with adjusted gross income over $5 million. Additionally, the top rate on capital gains would increase from 20 percent to 25 percent. It is estimated that the new proposals would raise $2.9 trillion in revenue when combined with $700 billion in revenue and cost savings from Medicare drug price changes. To fully pay for the president’s plan, the proposal factors in $600 billion from the estimated economic growth effects of the spending increase. The proposal would also raise an estimated $16 billion by limiting deductions for executive compensation and $96 billion from higher taxes on tobacco and nicotine products, including e-cigarettes.

Following an initial review of Subtitle I, Part 3, IRI flagged proposals of interest to the insured retirement industry. IRI has shared its initial review with members of its Government Affairs Advisory Committee, as well as with the joint trades, to begin a coordinated effort in response to the proposals. The Committee on Ways and Means is scheduled to mark up the proposals on Tuesday, September 14, and Wednesday, September 15. A section-by-section summary of Subtitle I is available here.

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

 

IRI meets with DOL Seeking Extension of PTE 2020-02 Implementation Date

On September 9th, we led a virtual meeting with Acting Assistant Secretary of Labor Ali Khawar, Deputy Assistant Secretary Tim Hauser, and other senior DOL staffers to discuss the possibility of delaying the 12/20/21 deadline for compliance with PTE 2020-02 by at least six months. IRI was represented by Jason Berkowitz, Jim Quinn, and Emily Micale, and they were joined by representatives from one broker-dealer member (Cetera) and one solution provider (InvestorCOM) that is developing an automated solution for compliance with the requirements of the PTE. During the meeting, we described the industry’s efforts to-date, the extensive work that remains to be done by many firms in order to achieve full compliance, and the significant cybersecurity risks inherent in forcing the industry to implement major technology solutions without adequate time for testing. The InvestorCOM representative also discussed the results of a recent survey of its clients on their readiness for compliance with PTE 2020-02. The DOL representatives requested a copy of the survey report, which was provided by email following the call and is available here for your reference.

Mr. Khawar asked if additional guidance from DOL would aid in industry’s implementation efforts, and we explained that, at the moment, our members need more time rather than additional guidance, though we also noted that this could change as we continued to proceed towards implementation. In response to our comment about the need for action on a delay by DOL sooner rather than later, Mr. Khawar pressed us for more clarity on this point and we indicated that a delay would become less effective if announced much later than the end of September. We remain hopeful that our messages resonated with Mr. Khawar and his team, but we also remain skeptical that the DOL will actually provide the relief we’ve requested. Looking ahead, we are working with our sister trades on a possible joint comment letter further emphasizing the need for a delay, and we expect to make a final decision on that front in the coming days. In addition, we are planning to arrange another meeting with the DOL later this month to discuss the forthcoming rulemaking and the issues facing independent insurance producers, and we set the stage for this follow-up conversation during the September 9 meeting.

Any questions should be referred to Jason Berkowitz or Emily Micale.

 

LEGISLATIVE NEWS

Reconciliation Package Includes IRI Supported Elder Justice Bill

The House Ways and Means Committee Reconciliation Bill’s Subtitle E, Part 2 includes an elder justice measure called for in IRI’s 2021 Federal Retirement Security Blueprint.. It would help to prevent financial exploitation and protect America’s older and vulnerable workers and retirees. The bill would ensure that the services and programs authorized under the Elder Justice Act (EJA) are provided federal funding. It includes an authorization for $4 billion for those programs, including $1.4 billion to directly support state and local Adult Protective Services (APS) agencies and $400 million for grants to address and prevent elder abuse and financial exploitation. This Subtitle of the Reconciliation Bill was introduced as a standalone bill by House Ways and Means Committee Chairman Richard Neal (D-MA) in August as the Elder Justice Reauthorization Act of 2021 (H.R.4969). IRI sent a letter of support to the bill’s sponsors and issued a press statement following the bill’s introduction. Additionally, IRI sent an email to the Ways and Means Committee members in advance of the markup hearing reiterating IRI’s support for the legislation. The Subtitle was passed out of Committee by a vote of 24 – 19.

Any questions should be referred to John Jennings.

 

RILA Act Gains Consumer Group Support

The Consumer Federation of America (CFA) recently announced its support for the Registration for Index Linked Annuities (RILA) Act (H.R.4865). The bill, which was introduced by Representatives Alma Adams (D-NC) and Anthony Gonzalez (R-OH) in July, directs the Securities and Exchange Commission (SEC) to devise a new registration form for registered index-linked annuities (RILAs). CFA supported the legislation because it represents how they believe disclosures can and should be designed with the needs of investors in mind.  The bill would require that disclosures be made based on the knowledge and sophistication of purchasers and the complexity of the product. It also calls for engaging in investor testing and having the results of that testing incorporated into the design of the new RILA form. The IRI-led RILA Task Force also launched its effort last week to organize meetings with all the House Financial Services Committee members to seek their co-sponsorship of the bill. 

Any questions should be referred to John Jennings.


Senate Banking to Hold SEC Oversight Hearing

The Senate Banking Committee has scheduled an oversight hearing of the SEC for September 14 at 10:00 am ET. The hearing can be viewed here. IRI will monitor the hearing and provide any updates as necessary.

Any questions should be referred to John Jennings.

 

REGULATORY NEWS

Adrienne Harris Nominated as Superintendent of New York Department of Financial Services

Governor Kathy Hochul has nominated Adrienne Harris as the next Superintendent of the New York Department of Financial Services, replacing Linda Lacewell, an ally of former Governor Andrew Cuomo. Ms. Harris is currently a senior adviser at the public relations firm Brunswick Group, and she previously served as a special assistant for economic policy in the White House and as a senior adviser in the U.S. Treasury Department. Her nomination is subject to confirmation by the New York State Senate.

Any questions should be referred to Sarah Wood.

 

Cassie Brown Appointed as Texas Commissioner of Insurance

Governor Greg Abbott has appointed Cassie Brown as the Commissioner for the Texas Department of Insurance (TDI). Ms. Brown previously served as commissioner for the Division of Workers’ Compensation and as deputy commissioner for Regulatory Policy at TDI. Ms. Brown’s term as Commissioner of Insurance is set to expire on February 1, 2023.

Any questions should be referred to Sarah Wood.

 

 West Virginia Insurance Commissioner Stepping Down

James A. Dodrill will be stepping down as West Virginia Insurance Commissioner. Dodrill, who became the Commissioner in March 2019, will remain in this role until a new commissioner is appointed by the Governor.

Any questions should be referred to Sarah Wood.