ACLI comes off bench to support legislation requiring employers offer access to retirement plans

Life insurance organization argues automatic plans would be 'marketplace solution,' not big government

Mar 12, 2019 @ 2:26 pm

By Mark Schoeff Jr.

The American Council of Life Insurers announced Tuesday it would back legislation to require employers to establish retirement savings plans for their workers.

Rep. Richard Neal, D-Mass., previously sponsored bills that would have required companies not offering plans to implement an automatic payroll deduction into retirement programs or individual retirement accounts. Firms would not have to match employee contributions and workers could opt-out. The smallest companies would be exempt.

In January, Mr. Neal became chairman of the House Ways and Means Committee. He appears ready to offer legislation again.

"This bill, which has broad support from a variety of groups — from AARP to a number of financial services companies — would provide an opportunity to save at work for millions of Americans," Mr. Neal said at a Feb. 6 hearing on retirement security. A spokeswoman for Mr. Neal said the legislation remains a priority, but there is no time line.

ACLI is trumpeting its support to build momentum for such legislation.

Previously, the group stayed on the sidelines as Mr. Neal's bills failed to gain any Republican co-sponsors.

"This is a dramatic move for us," said ACLI president and chief executive Susan Neely. "The focus is on the automatic enrollment. We're trying to nudge and encourage employees to do a better job of saving. This will make a big dent in the challenge that is looming for this country in terms of people having sufficient savings [when] they live longer."

Ms. Neely described ACLI as being "neutral" toward Mr. Neal's previous bills. Republicans opposed them because they saw it as a federal mandate on small businesses.

"This is actually not a big government-run program," Ms. Neely said. "This is a marketplace solution for small employers."

One benefit for the insurance lobby of retirement-savings bills is that they often include annuities provisions. For instance, the Retirement Enhancement and Savings Act, reintroduced in February, would make it easier for employers to include annuities within retirement plans. A previous iteration of one of Mr. Neal's bills would have enabled the rollover of annuities between retirement plans.

Birny Birnbaum, director of the Center for Economic Justice, warned that as more money goes into retirement savings accounts, adoption of a best-interest investment advice standard becomes even more important to protect ordinary investors.

"What we don't want to see is complex, high-fee annuities being sold to consumers," Mr. Birnbaum said.

ACLI is not the first insurance trade group to back Mr. Neal's legislation. In December 2017, the Insured Retirement Institute announced its support.

"We were out there first, when no one was there," said Paul Richman, chief government and political affairs officer at the Insured Retirement Institute. Mr. Neal's legislation "removes many of the legal and regulatory barriers that currently discourage employers from offering plans."

The National Association of Insurance and Financial Advisors is not yet behind automatic retirement-plan legislation.

"NAIFA is actively engaged with lawmakers, including chairman Neal, to find ways to make it easier for employers to sponsor plans," Judi Carsrud, NAIFA assistant vice president of government relations, said in a statement. "NAIFA believes the current voluntary private sector plan system is working but can be enhanced and expanded with simple provisions such as those found in the Retirement Enhancement and Savings Act."

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