The Insured Retirement Institute, citing action by regulators, proposed legislation in Congress and the creation of a new retirement caucus on Capitol Hill, suggested on Thursday that the nation is at a watershed moment with respect to retirement issues.
"There has never been more focus on retirement security issues in Washington, and there has never been a greater commitment from our policymakers to tackle these challenges head-on," IRI CEO Cathy Weatherford said in addressing attendees at the association's 2015 Marketing Summit.
"This presents a dynamic opportunity to advance sensible solutions to address the retirement income challenges facing many Americans. Our industry is well-positioned to help lead this effort," she said.
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As an example, she described the Treasury Department's rule last year facilitating access to longevity annuities in group retirement plans as a "defining moment."
Those rules allow 401(k) participants to move up to 25 percent of account assets, up to a maximum of $125,000, into a qualified longevity annuity contract, which distribute income to retirees later in retirement, typically after age 85.
The 401(k) money in QLACs would not be subject to the required minimum distributions that begin at age 70 ½ .
In spite of the favorable guidance, QLAC adoption in plans has been slow going so far.
Exploring wider adoption of QLACs was on the docket at IRI's conference, which is attended by product development executives in the insurance industry.
Whatever the fate of QLACs, Weatherford said she expects 2015 to bring more favorable regulatory action and legislation.
The Department of Labor is working on a rule that would require plan sponsors to include lifetime income estimates in participants' account statements. In the last Congress, Rep. Rush Holt, D-New Jersey, introduced the Lifetime Income Disclosure Act, which would also require income projections, though the bill ultimately stalled. IRI research shows 90 percent of participants would find the estimates useful.
And Weatherford and the IRI also expect several proposed retirement bills in the pipeline to get "considerable attention" in this Congress.
Sen. Orrin Hatch, chairman of the Finance Committee, has said his Secure Annuities for Employee Retirement Act would be a legislative priority this year.
Among its comprehensive reforms, the bill would give small businesses greater access to retirement plans by allowing them to pool participants in their assets in multiple employer plans.
The Retirement Security Act, a bipartisan bill introduced in Sen. Susan Collins, R-Maine, and Bill Nelson, D-Florida, would also facilitate access to MEPs.
Lee Covington, IRI's senior vice president and general counsel, said the strong bi-partisan support for MEPs suggested new legislation will be passed for small businesses' retirement needs.
"There's support for both bills. We're very optimistic that they will be strongly considered this Congress, and legislation will be passed. Given their overlap, it's possible they will be combined or wrapped into one bill, but that remains to be seen," said Covington.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
