The Issue: For the next 12 years, every single day 10,000 people will reach age 65. This demographic (among others) is not adequately prepared for retirement, especially when considering the current longevity predictions.The SECURE ACT, 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, the SECURE Act:
- Increases 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, the law allows employers to help their employees save more for retirement.
- Increases access to retirement plans, especially for small businesses. By removing unnecessary barriers to employers joining together in an open multiple employer plan (“open MEP”), SECURE makes 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 $500 tax credit to partially offset the costs of starting a plan for their employees incentivizes adoption of workplace retirement plans.
- Makes 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, the Act gives employers more clarity when choosing a provider for an in-plan annuity option. Furthermore, by allowing trustee-to-trustee transfer of lifetime income investments, the law lets savers preserve guaranteed lifetime income benefits and avoid surrender charges and fees. Finally, participants are 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 balances, thereby helping them make more informed decisions.
- SECURE includes necessary fixes to certain defined benefit pension plans, including "frozen" plans and plans sponsored by churches and charities.
Download the Issue Brief (PDF) Download the RESA Coalition Leave Behind (PDF)
NAIFA Position: NAIFA worked with both houses of Congress and the administration to ensure that the SECURE Act reflected real-world needs of retirement planners and workers saving for retirement. NAIFA also engaged in advocacy campaigns to strongly urge members of the House and Senate to pass the SECURE Act. It was signed into law in December 2019.