WASHINGTON, D.C. – President Biden’s American Families Plan should be augmented with additional measures to help America’s workers and retirees relieve the growing anxiety they feel about their retirement financial security, according to the Insured Retirement Institute (IRI).
The trade group wrote to President Biden and Congressional leaders with a detailed list of proposals to expand access to workplace retirement plans and lifetime income solutions, which can reduce the risk of outliving retirement savings.
“America’s workers and retirees feel the burden that has been placed squarely on their shoulders of accumulating savings to produce sustainable retirement income,” said Wayne Chopus, IRI President and CEO. “We are sharing ideas with the President and Congressional leaders that we believe will help America’s workers, retirees and their families strengthen and enhance their retirement security.”
IRI’s policy recommendations are focused on expanding opportunities to save for retirement, facilitating the use of lifetime income solutions, and augmenting the tax deferral treatment of retirement savings.
Among the thirteen specific proposals advocated by IRI is a requirement for all but the smallest businesses to offer a workplace retirement plan. This idea is embodied in the Automatic Retirement Act, introduced by Rep. Richard Neal (D-Mass.) in 2017 and expected to be reintroduced later this year. This measure complements provisions from the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which reduced barriers for employers to pool together to offer retirement plans and created incentives for small businesses to do so.
Other provisions advanced by IRI include raising the age at which retirees must take a required minimum distribution from retirement savings accounts from 72 to 75 to allow more time for savings to grow. Another proposal would help workers with student loans by allowing employers to make matching contributions into employees’ retirement accounts for those paying off student loans who cannot afford to make retirement savings contributions.
Two comprehensive, bipartisan bills from the previous Congress contain many of IRI’s top policy recommendations. The Securing a Strong Retirement Act by Rep. Neal and Rep Kevin Brady (R-Texas) and the Retirement Security and Savings Act by Sen. Rob Portman (R-Ohio) and Sen. Ben Cardin (D-Md.) are both expected to be reintroduced soon.
“The enactment of the SECURE Act in late 2019 was a big step forward for workers, retirees and their families,” Chopus said. “It has put them on a path towards relieving some of the anxiety they are feeling about their future retirement security. However, we also know that there is still much more that needs to be done to build their economic equity, strengthen their financial security, and protect their income in a way that can sustain them throughout their retirement years.”
Additional provisions sought by IRI would facilitate the use of lifetime income solutions. For example, one proposal would reduce barriers to the use of Qualified Longevity Annuity Contracts (QLACs). This investment vehicle can be used as longevity insurance to help address the fear of growing older and outliving retirement savings.
IRI also supports the Registration for Index-Linked Annuities Act, which would address regulatory barriers that restrict market access for registered index-linked annuities (RILAs). These products offer a way for investors to bring a balance to their retirement savings portfolio by allowing the purchaser the opportunity to participate in some market growth along with a reduced downside exposure to partially protect the investor from market losses.
Another IRI-advocated proposal would eliminate regulatory barriers for annuities as a default investment option when retirement plan participants fail to select investments for contributions to workplace retirement plans. As such, participants do not have a chance to convert their savings into protected, guaranteed lifetime income to sustain them during their retirement years.
“We are asking our nation’s leaders to augment the American Families Plan with measures to help people whose retirement security has been impacted by the pandemic or by America’s long-standing, looming retirement savings crisis,” Chopus said. “The proposals we offer will enhance and strengthen the nation’s retirement security for America’s workers and retirees today and tomorrow.”
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Contact: Dan Zielinski
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