Op-ed: This laws will create a retirement plan for hundreds of thousands of Individuals
Chairman of the House Ways and Means CommitteeRep. Richard Neal, D-Mass. (Left) and ranking member Kevin Brady, R-Texas.
Chip Somodevilla | Getty Images News | Getty Images
Bipartisanism is not what most of us would expect in a divisive election year. However, we saw this when members of the Democratic and Republican Houses came together and passed legislation to improve the safety of American retired workers.
The newly introduced House Act, the 2020 Strong Retirement Act, includes several proposals from the Insured Retirement Institute and others we support to help workers meet their retirement needs.
House Ways and Means Committee Chairman Richard Neal, D-Mass., And Ranking Member Kevin Brady, R-Texas, led the bipartisan negotiations that resulted in this bill.
Action was needed quickly, so we applaud your leadership for acting on this critical issue.
The pandemic has further hampered workers’ ability to plan for retirement and save, especially those approaching retirement age. The longer we wait, the more likely it becomes that too many Americans will lose the opportunity to raise savings to build a nest egg that will provide sustainable income in their retirement years.
Congress and President Donald Trump passed the Setting Every Community Up for Retirement Enhancement (SECURE) bill last year, which extends access to company retirement plans and improves the opportunities for workers to receive protected products with lifelong income.
The SECURE Act was the first step in reversing the looming retirement crisis in which too few workers are saving adequately. Now the Covid-19 pandemic and the economic damage it has caused has heightened retirement fears for millions of Americans.
More from the FA Playbook:
Consultants need to listen more to keep clients on board
Here are tips that financial advisers offer new parents
The workplace benefits may reflect the new reality of Covid-19
The numbers keep telling the story: 10,000 Americans retire every day. A survey commissioned by the Alliance for Lifetime Income found that 70% of savers are more pessimistic because of the pandemic and 56% of them may retire later than originally planned. The survey also found that only one in three Americans is very confident that they will meet all of their retirement costs.
A survey by Transamerica found that more than half of workers say the pandemic has affected their employment situation; B. reductions in working hours, wages, layoffs or vacation days and early retirement. These employment measures can reduce the ability of workers to contribute to employer-provided retirement accounts. One in five workers has or plans to withdraw money from their retirement accounts to cover ongoing living expenses, which may further put the security of retirement further out of reach.
In April, the Insured Retirement Institute recognized that measures taken to combat this pandemic and social distancing would have a negative impact on retirees and workers who are saving for retirement. We acted quickly and proposed a five-point recovery plan for retirement savers. We urged Congress to include our plan as it considers other measures to address the health and economic challenges of the pandemic.
This new legislation would build on the success of the SECURE Act and help workers and retirees save more so they can enjoy financially secure and dignified retirement. Like the SECURE Act, this new law is a comprehensive, bipartisan approach to improving employer-provided retirement benefit plans for workers by improving access and functionality.
The legislation includes provisions designed to help young workers save for retirement while paying back student loans, and allows for catch-up contributions for baby boomers who are about to retire. In addition, tax incentives for small business owners are clarified to encourage them to offer a company pension plan.
The legislation increases the age at which retirees must make minimum distributions from their retirement accounts to allow more time for savings to grow. It also removes barriers preventing greater use of lifelong income products to reduce the risk of surviving savings and broadens retirement options for nonprofit employees.
Many provisions of the 2020 Strong Retirement Act are similar to those in a bipartisan Senate bill put forward by Senator Rob Portman, R-Ohio and Senator Ben Cardin, D-Md. With such broad support in Congress, a solution is within reach to help millions of American workers.
Congress continues to show determination to address retirement issues with sensible proposals that are supported by both parties. While the SECURE Act will make a significant difference to millions of American workers and retirees, the Securing a Strong Retirement Act of 2020 will provide additional, necessary solutions to retirement security.
We have the right legislative solution, leadership, and bipartisan support. Action now will again demonstrate that Congress can provide bipartisan solutions to help workers and retirees when they need it most.
– From Wayne Chopus, President and CEO of the Insured Retirement Institute