The chances that bipartisan retirement security legislation could be acted on next year got a boost, as the American Retirement Association and witnesses at a Senate hearing urged Congress to act to help Americans save more for retirement.
Expanding the start-up credit for small businesses, allowing employers to make matching contributions for employees paying off student loan debt, and allowing a more generous auto-enrollment safe harbor were among the provisions that received bipartisan praise before the Dec. 9 hearing of the Senate Finance Subcommittee on Social Security, Pensions and Family Policy.
Portman-Cardin-Grassley Affinity
Those are among the provisions that are included in the Retirement Security and Savings Act (S. 1431) introduced in 2019 by Sen. Rob Portman (R-OH), who chairs the subcommittee, and Sen. Ben Cardin (D-MD). This legislation was front and center for much of the committee’s virtual hearing, entitled “Investigating Challenges to American Retirement Security.”
In fact, Portman noted that 27 of the provisions included in their legislation were also included in the SECURE Act 2.0 legislation introduced Oct. 27 by House Ways & Means Committee Chairman Richard Neal (D-MA) and Rep. Kevin Brady (R-TX), the ranking Republican member of the committee. “If that’s not bipartisan, I don’t know what is,” Portman stated, adding that he thinks “it’s a really good starting point and again it gives us a real opportunity to get something done.”
And in a significant development, Sen. Charles Grassley (R-IA), Chairman of the Senate Finance Committee, announced that he will be introducing legislation in the coming days that builds on the provisions in Portman-Cardin and in the Neal-Brady bills.
ARA Support
For its part, the American Retirement Association emphasized in a statement for the record that the Portman-Cardin bill provides “common sense practical solutions” to many of the impediments faced by small business employers interested in establishing or maintaining a retirement plan. “Small business employers will continue to need support throughout the coming years, even after the effects of the pandemic are reduced,” the ARA further stated. In particular, the ARA noted that it strongly supports the provisions to:
- create an additional higher automatic enrollment safe harbor;
- expand the Saver’s Credit;
- allow employer matching contributions into a 401(k) plan based on the amount an employee is paying in student loans; and
- expand retirement plan coverage beyond current statutory requirements by allowing employers to disaggregate other excludable employees from the top-heavy nondiscrimination test.
Witness Testimony
Testifying at the virtual hearing were Scott Barr, Financial Advisor with Edward Jones; Eric Stevenson, President for Retirement Plans at Nationwide; Michael Kreps, Principal at the Groom Law Group; and Joshua Luskin, President of National Association of Government Defined Contribution Administrators.
Barr, as well as the other witnesses, strongly urged the Senate to act on Portman-Cardin. “Edward Jones urges you to advance legislation that will first make it easier and less costly for businesses of all sizes, but especially small businesses to offer workplace retirement plans, and second increase opportunities and eliminate barriers that currently prevent Americans from adequately saving and preparing for their financial future. In pursuit of these goals, I reiterate our strong support for Portman-Cardin,” Barr stated.
“Even though the Retirement Security and Savings Act was introduced long before any of us encountered the term ‘COVID-19,’ the bill’s provisions will help us meet the challenge of both restoring pre-COVID-19 retirement security and enhancing it,” Stevenson stated. He pointed to six specific provisions in Portman-Cardin that Nationwide supports, including the student loan debt matching contribution provision, providing an enhanced catch-up contribution limit for workers age 60 and older, allowing collective investment trusts to be used in 403(b) plans, and increasing the required minimum distribution age to 75.
Pandemic Relief
Beyond the broad support for Portman-Cardin, there were also calls for acting on additional relief amid the ongoing challenges with the COVID-19 pandemic.
As part of its statement, the ARA also pushes for additional legislative relief for small business employers to help keep their plans going and be able to provide a steady source of retirement security for their workers. “The impact of the COVID-19 pandemic on the small business community cannot be understated, and it is feared its effects will extend well into 2021 and possibly beyond,” the ARA emphasizes, adding that, “Small businesses are doing all they can to avoid terminating the retirement plans that give so much support to their employees.”
To that end, the ARA proposes that 401(k) plan sponsors which have suffered a business hardship as defined by Code Section 412(c) be allowed testing relief, a funding holiday and partial plan termination relief.
Multiemployer Relief
While the hearing was intended to be focused primarily on defined contribution issues, there were also calls to address the multiemployer plan funding crisis. “If the entire multiemployer system collapses, it won’t just be retirees who will feel the pain,” stated Sen. Sherrod Brown (D-OH), the subcommittee’s ranking Democrat. Brown noted that these plans were already in danger before the pandemic and suggested that a solution should be part of a year-end deal on COVID relief.
In fact, to this point, Grassley noted that he has been in negotiations with Democrats to address the multiemployer solvency issue. “Both sides have very much been working diligently and very much in good faith and I appreciate that. And we plan to keep at this problem until we find a solution,” Grassley said.
The witness testimony and a video of the hearing are online here.
- Log in to post comments