As the retirement bill's chances of passing during the 115th lame duck session waned with the Senate action on Wednesday, a new retirement bill was introduced, giving further indication that retirement policy will be prioritized in the next session of Congress in 2019. (Photo: Shutterstock)
Update: After this article went to press, the House voted to pass a continuing resolution that includes the Retirement Security & Savings Act by a 217-185 margin. The CR also includes $5.7 billion for border security, making it unlikely it will reach the 60-vote threshold needed to pass out of the Senate.
Sweeping reforms to the U.S. private-sector retirement system will not be included in the Continuing Resolution Congress is currently debating to fully fund the federal government until February 8, according to sources familiar with the negotiations.
“Sadly, it looks like Congress will do a CR into February without any retirement legislation,” said Geoff Manville, a principal on the government relations team at Mercer, in an email. “We do expect RESA provisions to be back in play next year, but this is a disappointment.”
The Retirement, Savings, and Other Tax Relief Act of 2018, which included the major provisions of RESA — the Retirement Enhancement and Savings Act — was introduced in the House of Representatives last month, as Congress initiated the debate over funding the government before Friday's deadline to avoid a partial government shutdown.
On Wednesday, the Senate passed a temporary spending bill without the retirement provisions, and notably, without a provision that would fund a wall on the country's southern boarder. Today, President Trump said he would not sign a Continuing Resolution that does not include funding for the border wall.
|New retirement bill rolled out with no Open MEPs
Both RESA and the Retirement, Savings, and Other Tax Relief Act included provisions that would create Open Multiple Employer Plans and facilitate the adoption of guaranteed income products in 401(k) plans.
“While we are disappointed that Congress did not pass key provisions from RESA this year, we are optimistic about the legislation's prospects in the 116th Congress,” said Alane Dent, senior vice president, federal relations, for the American Council of Life Insurers.
“RESA remains a priority of both parties, within both chambers. We look forward to working with leaders in the House and Senate, as well as with committees of jurisdiction to ensure the legislation is considered swiftly,” added Dent in a statement.
As the retirement bill's chances of passing during the 115th lame duck session waned with the Senate action on Wednesday, a new retirement bill was introduced, giving further indication that retirement policy will be prioritized in the next session of Congress in 2019.
The Retirement Security & Savings Act, introduced by Senators Rob Portman, R-OH, and Ben Cardin, D-MD, establishes a new automatic enrollment safe harbor that raises the minimum default level from 3 percent to 6 percent, and automatically escalates to 10 percent over five years.
The bill would also expand eligibility for the existing savers' credit in the tax code and make the credit refundable. Refunds from the credit would be required to be contributed to a Roth account in a taxpayer's workplace plan or into a separate Roth IRA. Another provision allows employers to make matching contributions to retirement accounts based off employees' payments to qualified student loan debt.
Senators Portman and Cardin, both members of the Senate Finance Committee, have a history of moving bipartisan retirement legislation that dates back more than two decades.
But their latest initiative does not include a provision on Open MEPs, which allow unaffiliated businesses to pool workers and retirement assets under one defined contribution plan.
The Labor Department is in the process of finalizing a proposed rule that would allow employers to join MEPs, but under more limited circumstances than the Open MEP proposals in RESA and The Retirement, Savings, and Other Tax Relief Act.
Under Labor's proposal, unaffiliated employers would have to be located in the same municipality or state to join a MEP. Also, retirement industry service providers would not be able to sponsor MEPs under Labor's rule, which has been met with considerable criticism from industry.
According to Mercer's Manville, Senators Portman and Cardin's bill does not include an Open MEP provision out of deference to RESA's original sponsors—retiring Sen. Orin Hatch, R-UT, and Sen. Ron Wyden, D-OR, ranking member of the Senate finance committee.
“But I think there's a chance that Open MEPs and maybe other RESA provisions could land in a reconstituted version of the Portman-Cardin bill next year,” said Manville.
Portman and Cardin's bill establishes a foundation for broader bipartisan, bicameral retirement policy debate in the next Congress, according to a joint statement from the lawmakers, who pledged to improve on the introduced legislation.
“While we've made important policy improvements over the years, Congress needs to work continually with participants, retirees, and other stakeholders to make sure that retirement security is achievable, especially as our economy changes,” said Senator Cardin.
Introduction of the Retirement Security & Savings Act was met with broad support across industry, including AARP, the American Benefits Council, and the largest service providers to 401(k) plans.
“We are grateful to Senators Portman and Cardin as they once again take the lead in offering reforms to provide American workers with a more secure retirement,” said Ed Murphy, president of Empower Retirement, in a statement. “Their proposed legislation would expand coverage and encourage higher savings rates, promote lifetime income options and reduce administrative burdens.”
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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.
