Picking up where they left off in the last Congress, Reps. Lisa Blunt Rochester (D-DE) and Tim Walberg (R-MI) have reintroduced legislation to make it easier for retirement plan sponsors to provide guaranteed lifetime income products as part of their DC plan.
In general, the Increasing Access to a Secure Retirement Act (H.R. 1439), introduced in the House of Representatives Feb. 28, would amend ERISA to provide a fiduciary safe harbor for the selection of a lifetime income provider. To qualify, the fiduciary would be obligated to meet certain requirements in considering and selecting the insurer, including a determination that at the time of selection, the insurer is financial capable of satisfying its obligations under the guaranteed retirement income contract and that the cost of the contract is reasonable.
Many employers remain reluctant to use an existing safe harbor to provide a lifetime income solution, contending that earlier guidance was not clear and unworkable. Walberg previously explained that he got the idea for the legislation when he discovered that plan sponsors were not protected under the prudent-person standard if they were to provide a lifetime income annuity as part of their DC plan.
“By clarifying rules surrounding annuities and strengthening safe harbor protections for plans, we hope to increase the suite of saving options employers can offer and the amount employees choose to save,” Blunt Rochester said in a statement announcing the reintroduction of the legislation.
Providing a lifetime income safe harbor has been included in several pieces of legislation over the past couple of years, including the Retirement Enhancement and Savings Act, as well as last year’s Family Savings Act. It’s probably a safe bet that if and when retirement security legislation moves in this session of Congress, some form of a fiduciary safe harbor for the selection of a lifetime income provider will be included.