Will 4 New Bills From Biden Help Americans Save For Retirement?
Written by
Ashley Donohoe
Edited by
Nicholas Morine
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While the SECURE Act 2.0 made strides to help Americans save for a more secure retirement, the Insured Retirement Institute (IRI) has called for further action. In a letter written on July 12, the IRI asked President Joe Biden to consider four bipartisan bills that it highlighted in its 2023 Federal Retirement Security Blueprint. If they become law, these bills could give those eligible for workplace retirement plans benefits such as access to guaranteed lifetime income options and automatic savings plan enrollment.
The Lifetime Income for Employees Act calls for changing the Employee Retirement Income Security Act (ERISA) of 1974. If employees don’t otherwise make selections, retirement plan sponsors would be able to act on their behalf to put up to 50% of employees’ contributions toward annuities with delayed liquidity features. Along with providing better potential returns, these annuities would give retirees the peace of mind of having a guaranteed income stream during retirement.
Affecting those with 403(b) plans, the Retirement Fairness for Charities and Educational Institutions Act of 2023 makes changes to federal securities laws. Plan participants working for public schools or covered charities would be able to invest in less expensive options such as a collective investment trust (CIT). They could also benefit from guaranteed lifetime income options for a more stable retirement.
The General Account Products Classification Act of 2022 supports the availability of principal preservation funds and stable value funds and offers protection for insurers offering these products. As the IRI explained in the letter, “These general account products allow participants to shield all or a portion of their account balances from the risk of loss while providing income that accrues at a steady, predictable rate to retirement plan providers.”
Lastly, the Automatic Retirement Plan Act would mean that many employers would need to place employees in retirement savings plans by default, although workers may opt out. In addition, the bill includes a provision for retirement plan participants who have at least $200,000 saved. The IRI wrote that employers would need to let such participants “receive up to 50 percent of their vested balance in the form of a protected, guaranteed lifetime income product.”
While these bills could help more Americans enter retirement with a guaranteed lifetime income stream, the IRI is concerned about a possible roadblock. A proposed Department of Labor rule for August 2023 could make it harder for many Americans to receive the affordable professional guidance they need for effective retirement planning.
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