Commentary June 14, 2022 at 07:44 AM Share & Print
What You Need to Know
- The Senate Finance Committee is expected to introduce its own retirement bill before July 4.
The Senate Health, Education, Labor & Pensions Committee passed by voice vote Tuesday the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg, or Rise & Shine Act, legislation that’s intended to be included in the Senate’s version of Secure Act 2.0.
The Senate Finance Committee is expected to introduce its own bill as part of a Secure Act 2.0 plan before July 4. The bills from the HELP Committee and Finance Committee will be combined to make up the Senate’s Secure Act 2.0 package.
The Senate bill will reconciled with the House-passed Secure Act 2.0 legislation, which passed in March, before a final bill gets voted on by both chambers.
Sen. Patty Murray, D-Wash., chairwoman of the Senate Health, Education, Labor & Pensions Committee, said, S. 4353, the Rise & Shine Act is “the most comprehensive retirement package this Committee has considered in a decade … And not a moment too soon.”
Murray introduced the bill on June 7 with the committee’s top Republican, Richard Burr of North Carolina.
During markup of the Rise & Shine bill Tuesday, the HELP Committee agreed to include an amendment that directs the Labor Department to study the effects of inflation on retirement savings.
The COVID pandemic “upended our economy,” Murray said during the bill’s markup, noting that “there are the countless people across the country who never even had access to a retirement plan or were never even paid enough to make ends meet — let alone save for the future.”
Now, she continued, “families are trying to recover — all while paying more at the grocery store and the gas pump.”
The Rise & Shine Act takes “so many steps in this bill to bolster families’ retirement and emergency savings,” Murray said.
Along with a measure on emergency savings accounts, the bill also “makes it easier for employers to offer retirement plans” and “makes it easier to manage plans” as well as improves participation via auto-reenrollment, she said.
The bill allows employers to offer pension-linked emergency savings accounts, which they may automatically opt employees into at no more than 3% of salary. The accounts would be capped at $2,500 (or lower as set by the employer).
Contributions are made post-tax, and are treated as elective deferrals for purposes of retirement matching contributions. Once the cap is reached, the excess emergency savings contributions return to retirement plan savings.
Shai Akabas, director of economic policy at the Bipartisan Policy Center, said Tuesday in a statement that “allowing for automatic enrollment into emergency savings accounts” not only creates “a buffer against unexpected costs in the near term,” but also reduces “the likelihood that a person will make early withdraws from retirement savings for those emergency costs.”
In addition to helping companies set up traditional retirement plans, the bill also “makes it easier for people to establish new employee-owned businesses,” Murray said.
The bill also includes the INFORM Act, “which will ensure people get the information they need when forced to consider whether to take a lump-sum buyout and trade a lifelong pension for a one-time payout,” Murray said.
Wayne Chopus, president and CEO of the Insured Retirement Institute, said Tuesday that the bill’s passage out of committee “is a critical milestone toward addressing the anxiety and insecurity that many of America’s workers and retirees have about achieving a financially secure retirement.”
Eric Pan, CEO of the Investment Company Institute in Washington, added in another statement that the “unanimous vote to advance the bill shows that the Senate is working hard to join the House in passing much-needed legislation to expand access to retirement savings plans and improve Americans’ ability to save.”
ICI , Pan said, “looks forward to the Senate Finance Committee adding to the legislation, and encourages consideration by the full Senate of a bipartisan retirement-savings reform package as soon as is practicable.”