An insurance trade association wants Congress and the Trump administration to help retirement savers rebuild their accounts and assist workers in jump-starting the building of their nest eggs after the coronavirus pandemic passes.
The Insured Retirement Institute, which represents insurance and financial firms offering annuities and other guaranteed-income products, on Tuesday released a five-point plan for provisions to incorporate into COVID-19 recovery legislation.
The IRI plan would raise the age for required minimum distributions from retirement plans and individual retirement accounts to 75, up from the current 72. It also would make it easier to use annuities in retirement plans, allow catch-up retirement contributions regardless of age for employees returning to work after losing their jobs during the outbreak, and increase incentives for nonprofits and small businesses to offer retirement plans.
IRI officials said the organization is trying to put retirement savings on the radar of lawmakers when they turn from legislation that addresses the immediate pandemic challenge to measures targeted at broader economic revival.
“We believe strongly we must also never lose sight of the importance of planning for the future to ensure that Americans’ retirement security does not become another casualty of the pandemic,” IRI Chief Executive Wayne Chopus told reporters on a conference call.
Congress has passed three bills that address the pandemic, one of which was a $2.2 trillion economic stimulus measure that included provisions to delay RMDs and allow investors penalty-free access to their retirement accounts to meet urgent needs.
COVID-19 recovery legislation is an inviting target for lobbyists. Several trade associations representing financial advisers are advocating for the restoration and expansion of a tax break for advisory fees.
The provisions in IRI’s legislative ask have each been included in other bills that have already been introduced by Republicans and Democrats, so lawmakers won’t be seeing them for the first time during recovery legislation deliberations, said Paul Richman, IRI chief government and political affairs officer.
“We think there will be an appetite in Congress for this once they get through these mitigation phases and really focus on recovery for America’s economy,” Richman said. “We think Congress will see the merits of these proposals. We’re not asking for hundreds [of provisions]. We’ve put together five real thoughtful proposals … that will allow Americans when they go back to work to save more for today and save more for tomorrow.”
The IRI agenda calls for the Treasury Department to raise the current limit of 25% of a retirement plan or IRA that can be rolled over into a qualifying longevity annuity contract. The organization also wants Congress to facilitate the use of fixed and variable annuity contracts with guaranteed benefits.
Annuities can provide sure income that soothes worries about outliving retirement funds. But they’re also complex and costly products that for years have been a flash point in the debate over raising investment advice standards.
“Particularly the provision on indexed and variable annuities seems like a pretty brazen effort to use the coronavirus to benefit annuity pushers rather than retirement savers,” said Barbara Roper, director of investor protection at the Consumer Federation of America. “If they really wanted to benefit retirement savers, they would reduce costs and embrace a true fiduciary standard for the sale of their products.”
The insurance industry scored a big victory with the passage of the SECURE Act late last year, which introduced major retirement-savings reforms.
“They want to use the coronavirus pandemic to get a little more,” Roper said.
Jason Rosenstock, a partner at the government relations consulting firm Thorn Run Partners, said the IRI lobbying effort should be well-received on Capitol Hill.
“IRI has done a really good job of crafting policies that will help people deal with the aftermath of the [COVID-19] crisis,” Rosenstock said.
But it could be weeks before Congress takes up another major round of pandemic relief.
‘It’s unclear what the timing of phase four will be and when [legislators] will get around to negotiating it,” Rosenstock said.