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Over the past month, three congressional committees have held hearings about taking a closer look at issues related to retirement plans, primarily defined benefit pension plans.
The Senate Finance hearing “Helping Americans Prepare for Retirement: Increasing Access, Participation and Coverage in Retirement Savings Plans” examined the current state of retirement savings and focused on increasing access and contributions while decreasing plan leakage (i.e., assets in a participant's plan being accrued and used for purposes other than retirement). Several important themes emerged from the hearing, including the importance of automatic enrollment into employer-provided retirement plans, support for open access to multiemployer pension (MEP) plans and general concern about placing caps on retirement savings contributions that are tax-exempt.
While Congress evaluates various proposals, HR professionals need to be aware that employer-sponsored plans could be impacted, should Congress attempt to mandate employers to provide automatic enrollment features to plans or mandate coverage for part-time workers—benefits that many employers currently offer on a voluntary basis. While Chairman Orrin Hatch (R-UT) indicated that additional hearings will be held this year to specifically discuss the challenges facing multiemployer defined benefit plans, there is a good possibility that there could be movement on current proposed legislation. Specifically, legislation mandating automatic enrollment of IRAs (S. 245).
In the House, the Education and the Workforce Committee passed H.R. 4293, the Affordable Retirement Advice Protection Act, and H.R. 4294, the Savers Act of 2015, which was later approved by the Ways and Means Committee on a party line vote.
The two bills, introduced in late December in response to the Department of Labor’s (DOL’s) proposed fiduciary rule, will establish a best interest standard and embrace several elements of the DOL’s fiduciary proposal, while modifying others. The bills also pre-empt the DOL from making any changes to the definition of “fiduciary” and make a statutory change to the Employee Retirement Income Security Act that changes the definition of “investment advice.” The bills now go to a vote by the full House, where some Democrats and many Republicans are expected to support them. While the proposed fiduciary rule may not directly affect all HR professionals, it may affect the type of choices plan participants receive. As a result, it is important to fully understand the possible obligations and implications of the rule and/or legislative action.
This congressional activity occurs as the annual America Saves Week begins on Feb. 22. Next week will be dedicated to enhancing the public’s awareness of their personal savings and will bring together a variety of stakeholders who are committed to encouraging savings as a way to build personal wealth, with retirement savings as a key component. SHRM is a strong supporter of America Saves Week, as the event serves as an important reminder of the valuable role employer-provided retirement plans play in building a
financially secure retirement. As Congress works to strengthen the current retirement system, SHRM will be advocating on behalf of the HR profession, detailing the importance for employer-provided benefits.
In This Issue
Capitol Hill Update
Fiscal Year 2017 Budget Developments
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