IRI and the insured retirement industry’s commitment to championing retirement security for America’s workers and retirees includes working to increase protections for seniors against often devastating financial fraud.
Exploitation and fraud are serious threats to older Americans’ retirement financial security. The bad actors perpetrating these crimes are increasingly sophisticated in their efforts to defraud the vulnerable. One mistake – answering a phone call, responding to an email, or misplaced trust – can instantly erase a lifetime’s savings.
Millions at Risk, Billions at Stake
The U.S. senior citizen population is expected to increase to 84 million by 2050. As millions prepare for retirement, a large influx of money distributed from retirement accounts has created an environment ripe for criminals looking to take advantage of others.
Roughly 1 in 10 seniors fall victim to financial exploitation and fraud. According to the Senate Special Committee on Aging’s 2019 Fraud Book, elder abuse and exploitation costs an estimated $2.9 billion annually. Financial abuse and exploitation incidents average a loss of $120,000, which, for some seniors, can be their entire retirement savings.
A Front-Line Role
The insured retirement industry is on the front lines and often the first to notice when something is amiss. That’s why IRI’s 2023 Federal Retirement Security Blueprint includes measures to increase protections and resources to combat financial fraud and exploitation.
One of IRI’s early and successful anti-fraud efforts was supporting the Senior$afe Act in 2018. This law removed a barrier that was preventing the industry from reporting suspicious activity without risking a violation of individual privacy protections. The Senior$afe Act was a positive step, but more needs to be done and IRI is leading the way.
In the first five months of 2023, Congress acted on two IRI-advocated bills that would provide additional safeguards for seniors’ retirement savings.
The House of Representatives overwhelmingly passed the Financial Exploitation Prevention Act, 419-0.
This bipartisan bill will enable open-ended investment companies to delay the redemption of a security if they believe the request was made to exploit its owner.
The bill also allows state courts, regulators, and administrative agencies to delay payment of suspicious redemption requests further. This will provide additional time for investigations to determine the legitimacy of the redemption request. The measure was introduced by Representatives Ann Wagner (R-Mo.) and Josh Gottheimer (D-N.J.).
A second bill, the Senior Security Act, was adopted by the House Financial Services Committee by a vote of 49-0. This bill directs the U.S. Securities and Exchange Commission (SEC) to create an interdivisional task force to study the challenges facing older investors – including problems associated with cognitive decline and financial exploitation – and report to Congress with its recommendations for additional protections. The bill also directs the Government Accountability Office to study the cost of financial exploitation of the elderly. Rep. Wagner and Rep. Gottheimer also introduced this bill.
More senior citizens can be protected if both bills are enacted into law. However, both industry and government must continue to be vigilant to stay ahead of the financial predators. Workers spend decades saving for a financially secure and dignified retirement. Our laws should offer adequate protection to prevent exploitation that can turn retirement dreams into financial nightmares.
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