(PlanSponsor) - The Insured Retirement Institute wrote to the administration of President Joe Biden on Wednesday, calling for additional retirement legislation that includes furthering the use of guaranteed income annuities and allows the use of collective investment trusts in nonprofit 403(b) plans.
In the letter addressed to the White House, the Washington-based institute championed the sweeping SECURE 2.0 Act of 2022 passed last year while calling for the passage of additional retirement policies previously brought before Congress.
“There is still more that needs to be done to soothe the anxiety that middle-class workers and retirees across America express about their ability to accumulate sufficient savings that will provide them with a sustainable income to last throughout their retirement years,” IRI President and CEO Wayne Chopus wrote in the letter.
The move follows the IRI’s announcement in February that it would focus its advocacy efforts on removing barriers to including guaranteed lifetime income annuities in retirement plans as qualified default investment alternatives. With that announcement, the institute published 28 legislative goals as its 2023 Federal Retirement Security Blueprint.
In Tuesday’s letter, the IRI highlighted four acts previously brought before Congress:
- The Lifetime Income for Employees Act of 2023, which would allow retirement plan sponsors to use lifetime income solutions for a portion of contributions made by participants who have not made retirement plan investment selections. These lifetime income solutions have delayed liquidity features and can provide better returns as qualified default investment alternatives, the IRI wrote.
- The Retirement Fairness for Charities and Educational Institutions Act of 2023 would amend federal securities law to provide 403(b) retirement plan participants with equal access to cost-efficient investment options that use CIT and unregistered insurance company separate accounts, including protected lifetime income solutions. This would level the playing field among private sector, public sector and nonprofit 403(b) retirement plans, allowing employees of charities, schools and universities access to lower-cost investment options, the IRI argued.
- The General Account Products Clarification Act of 2022 would ensure legal certainty for insurers offering stable value and principal preservation funds. These products protect retirement account balances from loss and provide steady income, the IRI wrote.
- The Automatic Retirement Plan Act would address retirement insecurity by requiring all but the smallest of employers to offer automatic retirement savings plans. Employees would be enrolled by default but could opt out. The bill would also require that participants with account balances of $200,000 or more be given the choice to receive up to 50% of their vested balance in the form of a protected, guaranteed lifetime income product, the IRI noted. The act aims to increase coverage for minority communities, as nearly 64% of Latino workers, 53% of Black workers and 45% of Asian American workers lack access to an employer-provided retirement plan.
In addition to further legislation, the IRI’s letter noted a potential obstacle to SECURE 2.0 provisions and other legislation: a new Department of Labor proposal, expected in August.
The proposal, as referenced by IRI, seeks to further expand the federal and state framework regulating the standard of conduct for financial professionals who provide personalized advice about investments and insurance to retail consumers. A similar DOL rule was vacated by a federal appeals court in 2018, the IRI noted. It argued that “there is no evidence indicating that the current regulatory framework fails to protect retirement savers effectively.”
“The forthcoming regulation has the potential to significantly impact access to affordable professional financial advice, particularly for Black and Latino workers and retirees,” the Institute wrote. “Moreover, it may further widen the existing wealth gap.”
By Natalie Lin
July 12, 2023
