Congressional efforts to expand workplace saving programs have been missing a key element for a Republican-majority Capitol Hill — backing from the GOP.
The Insured Retirement Institute, a trade association representing the annuity industry, is trying to change that equation this year.
At the top of its legislative agenda is a bill introduced in December by Rep. Richard Neal, D-Mass., ranking member of the House Ways and Means Committee, called
The Automatic Retirement Plan Act of 2017.
The measure would require most small businesses that don't have a retirement plan to establish a 401(k) plan and automatically enroll their employees.
In the previous Congress, Mr. Neal introduced a similar bill that would establish automatic individual retirement accounts. He failed to get any support from Republicans, who were leery of what they viewed as a small-business mandate when the party had been fighting health-care reform because of small-business requirements.
Mr. Neal's bill in the current Congress focuses on 401(k) plans and has features that lessen the costs to small businesses, according to Lee Covington, IRI senior vice president and legal counsel.
For instance, the legislation would not require a company to set up a 401(k) plan in its first three years of existence, and would provide tax credits for five years after the plan is established. The bill does not require business owners to match their employees' contributions.
"Rep. Neal has really tried to make this as painless for small businesses as possible," Mr. Covington told reporters on a conference call Wednesday about
IRI's legislative agenda. "We're in the process of educating Republican members of Congress. We know that there is interest among some Republicans."
So far, Mr. Neal's bill has not garnered any cosponsors. A spokesman for the lawmaker was not immediately available for comment.
Usually, insurance and brokerage groups can count on Republican backing for bills they support. But auto-enrollment, seen by IRI as a key way to increase the retirement savings rate among workers, has proved a challenge.
The Financial Services Institute, which represents independent broker-dealers and financial advisers, has
opposed state-run auto-IRA programs that have cropped up around the country. The organization has not yet taken a position on Mr. Neal's legislation.
"We are carefully analyzing all of the details of the bill, but we support any legislation that recognizes the important role independent financial advisers can play in solving the retirement savings crisis," FSI executive vice president and general counsel David Bellaire said in a statement.
Bipartisan support has been established from the get-go for another bill on IRI's agenda. Reps. Tim Walberg, R-Mich., and Lisa Blunt Rochester, D-Del., are authors of the
Increasing Access to a Secure Retirement Act, which would help employers offer annuities in retirement plans. It would allow them to use products that meet capital and reserve standards set by state insurance regulators instead of requiring companies to ascertain those factors on their own as part of their fiduciary responsibility.
"It doesn't make a lick of sense for every small employer in the country to make their own independent assessment [of an annuity provider]," Mr. Covington said. "They should be able to rely on the experts."
