Annuities group wants 401(k)s for all — including cannabis workers

An annuities industry lobbying group will be pushing Congress to make it all but mandatory for employers to automatically enroll their workers in retirement plans.

In a federal and state policy wish list published Tuesday, the Insured Retirement Institute said it plans to encourage lawmakers to pass a bill that would require all employers — except for very small businesses — to provide retirement plans. Similar legislation has been floated in the past, however, including the Automatic Retirement Plan Act of 2017.

The group also plans to push for retirement plan coverage for workers at legal marijuana businesses and to expand 401(k) provisions for participants saddled with student loan debt. The IRI is also lobbying the Department of Labor to make it legal for asset management firms to sponsor multiple-employer plans.

The lobbying agenda comes on the heels of a massive win for the retirement services industry with the passage of the SECURE Act. IRI was a longtime supporter of that legislation — including a provision requiring lifetime income estimates on plan statements, and another that will make it easier for employers to add annuities as options within their 401(k)s and other plans.

Under the proposed retirement plan legislation, employers would be required to automatically enroll workers in plans, though workers would be able to opt out, IRI noted in its announcement.

The group also plans to push Congress to expand certain provisions of the SECURE Act. For example, it will seek to have 403(b) plans made eligible for so-called "open multiple-employer plan” treatment, much as 401(k) plans now are. SECURE expanded eligibility for MEPs, allowing unrelated businesses to participate in the same plans, which are called pooled employer plans. However, SECURE did not explicitly include nonprofits, religious groups, colleges or other 501(c)(3) groups in the PEP provisions, the association noted.

Cultivating savings

A challenge for the relatively new cannabis industry is that businesses operate legally under some state laws, but remain illegal at the federal level. That means some workers may be ineligible to participate in employer-sponsored plans, the IRI stated.

“The cannabis industry is already sizable, employing approximately 300,000 employees nationwide,” the group wrote in its policy agenda. “As more states pursue and enact laws to legalize cannabis, this workforce will continue to grow.”

IRI will encourage members of Congress to enact legislation that would reduce liability around retirement plans and individual retirement accounts for such businesses and their workers, it wrote.

Burdened by debt

The problem of excessive college debt is well-documented, and numerous surveys have shown that recent graduates often forgo 401(k) contributions in order to more quickly pay down loans. The IRI plans to lobby for statutory language that would allow businesses to make “matching” contributions to 401(k)s for workers who do not make contributions but instead are making loan payments. While the IRS recently hinted in a letter to a single employer that such an arrangement would be legal, the government did not specifically say that it would be allowable for all employers to do so.

Other federal goals

Although the age for required minimum distributions was recently raised from 70½ to 72, the IRI said that doesn’t go far enough. The RMD age should be raised to at least 75 to help adjust for greater life expectancies, the group stated.

It also plans to lobby to allow ETFs to be used as the underlying investments in variable annuities.

Among other goals, it will pressure the Securities and Exchange Commission to finalize a rule allowing summary prospectuses for variable annuities, something the insurance industry has sought for years. Full VA prospectuses can be hundreds of pages long, while summary documents would provide customers an overview of products in just several pages.

State level

This year, the IRI will encourage states to adopt the National Association of Insurance Commissioners’ best-interest model regulation. Conversely, it is lobbying hard against efforts by states to develop their own best-interest or fiduciary standards — something that a handful of states began doing several years ago, when the Labor Department’s now-defunct Conflict of Interest Rule began to unravel.

“States should not proceed with such efforts without first evaluating the actual effectiveness of [the SEC’s] Regulation Best Interest,” the IRI stated.

The IRI spent $440,000 on lobbying efforts in 2019 and works with a total of eight individual lobbyists, according to data tracked by Open Secrets.