Retirement Savings

The Issue: For the next 12 years, every single day 10,000 people will reach age 65. This demographic is not adequately prepared for retirement, especially when considering the current longevity predictions.  The Retirement Enhancement and Savings Act (RESA), H.R. 5282, is a package of bipartisan, bicameral provisions that will improve retirement readiness by enhancing safe harbors, creating incentives for employers to expand participation and increase savings levels, and would open opportunities for small businesses to sponsor plans themselves by easing administrative and reporting obligations and costs.
 
Background: Specifically, RESA would
  • Increase worker participation and savings rates by enhancing automatic enrollment and contribution increase features within employer-sponsored plans. By removing the 10% cap on automatic increases to employee contributions, but still allowing employees to opt out of such increases, employers will be able to help their employees save more for retirement. To incentivize this helpful practice, which has been proven to increase retirement savings, RESA will provide employers with up to a $1,500 tax credit for adding auto-enrollment to a new or existing plan.
  • Increase access to retirement plans, especially for small businesses. By removing unnecessary barriers to employers joining together in an open multiple employer plan (“open MEP”), RESA would make it easier for employers to achieve economies of scale, relieve administrative burdens and reduce liabilities associated with operating retirement plans. Additionally, providing small employers with up to a $5,000 tax credit for three years toward the costs of starting a plan for their employees would incentivize adoption of workplace retirement plans.
  • Make it easier for workers to manage retirement savings over their lifetimes by increasing education and access to lifetime income products, including guaranteed income solutions, for all retirement plans. By improving the current annuity provider selection safe harbor employers would have more clarity when choosing a provider for an in-plan annuity option.  Furthermore, by allowing trustee-to-trustee transfer of lifetime income investments savers can preserve guaranteed lifetime income benefits and avoid surrender charges and fees. Finally, participants would be better informed by receiving an annual illustration on their yearly benefit statement that displays the estimated monthly retirement income they could receive from their account balance, thereby helping them make more informed.
  • RESA includes necessary fixes to certain defined benefit pension plans, including "frozen" plans and plans sponsored by churches and charities.
 
NAIFA Position: NAIFA encourages Congress to pass the Retirement Enhancement and Savings Act. Taking steps to improve the current employer-based retirement system is more important now than ever before. RESA enjoys wide-ranging support from churches, charities and non-profits, large and small employers, emergency responders, and the retirement industry among others.
 
Download the Issue Brief (PDF)
Download the RESA Coalition Leave Behind (PDF)