Retirement trade group urges feds to stop DOL fiduciary rule, pass 33 proposals
The Insured Retirement Institute released its 2024 Federal Retirement Security Blueprint, urging Congress to enact changes within retirement legislation and the DOL to withdraw its proposed fiduciary rule.
In anticipation of significant federal regulatory activity in the coming year from the Securities and Exchange Commission and the Department of Labor, the Insured Retirement Institute (IRI) encouraged regulators to consider 33 proposed policies that it says will enhance and strengthen retirement security for America’s workers. The policy proposals included in IRI’s 2024 Retirement Security Blueprint focus on expanding opportunities to save for retirement, encouraging guaranteed lifetime income solutions, and fostering innovation and education.
#1: Foster innovation and education
Among IRI’s most urgent objectives is opposing the DOL’s 2023 Proposed Fiduciary Rule, which it said significantly expands the circumstances under which a financial professional would trigger fiduciary status under ERISA and impact fair compensation. IRI has called for DOL to withdraw the proposal in its entirety and discontinue the rulemaking project. If DOL does not withdraw the proposal, Congress should act to prohibit DOL from finalizing, implementing or enforcing the proposal or act to disapprove any final rule under the provisions of the Congressional Review Act, according to the policy blueprint.
#2: Expand opportunities to save for retirement
To expand retirement savings opportunities, particularly for the 50% of workers who do not have access to a pension or retirement savings plan, IRI said Congress should enact the Automatic IRA Act of 2024 requiring all but the smallest of employers to maintain an automatic retirement savings plan and automatically enroll employees. IRI also wants to see regulation or guidance expanding savings opportunities to the country’s 73.3 million gig workers.
To address the need to protect people who leave the workforce temporarily to care for a family member, often women, IRI said Congress should pass the Expanding Access to Retirement Savings for Caregivers Act (H.R. 6772-118th Congress), which would allow qualified caregivers to make catch-up contributions when they return to the workforce for a period equal to their time spent as a caregiver before reaching age 50. Going beyond automatic enrollment, which has proven to be an effective tool to encourage workplace retirement plan participation, IRI is calling for legislation that incentivizes employers to deploy re-enrollment tools as a way to prompt employees to re-evaluate their initial opt-out decisions periodically. An example of legislation includes the Auto Re-enroll Act of 2022, which called for ERISA and IRS code to be amended to allow plan sponsors to re-enroll non-participants at least every three years. IRI’s proposals also call for legislation that would provide tax credits for small employers who institute re-enrollment tools.
Finally, IRI wants to see the pool of participants expanded by lowering the minimum age for access to workplace retirement plans. The organization noted many young Americans are foregoing college and beginning their full-time careers in their late teens. They should have the opportunity to begin saving for retirement in workplace plans, said IRI. For example, the Helping Young Americans Save for Retirement Act would reduce the age of participation in an ERISA-covered defined contribution plan to 18.
#3: Encourage guaranteed lifetime income solutions
IRI’s policy proposals also encourage the use of guaranteed lifetime income products to address the concern Americans have about outliving their retirement savings. Congress should enact legislation providing that employers who offer protected, guaranteed lifetime income solutions as a default distribution option for participants in their DC plans will have satisfied their fiduciary duties under ERISA as long as participants are notified of the default annuitization option and have the right to opt-out at the time of distribution, said IRI.
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Additionally, Congress should enact legislation that would establish a qualified payout option (Q-PON) that requires employers who have at least 10 employees and have provided a plan for at least three years to offer a combination of income and payout solutions that participants can select from at retirement, said IRI. Some options that could be made available as a Q-PON include protected guaranteed lifetime income solutions, systematic withdrawal options, managed payout options and lump sum withdrawals.