2021’s Retirement Legislation Wishlist Left Unfulfilled

Retirement plan industry lobbyists and advocates hoped 2021 would deliver another much-needed round of reforms building on the SECURE Act of 2019, but so far, they have remained disappointed.

It has now been nearly two weeks since the U.S. House Committee on Education and Labor voted unanimously to advance legislation that would improve access to retirement plans for employees and ease plan administrative burdens for employers.

The Retirement Improvement and Savings Enhancement (RISE) Act (H.R. 5891) was introduced in early November by Committee Chairman Bobby Scott, D-Virginia, with support from Representatives Virginia Foxx, R-North Carolina; Mark DeSaulnier, D-California; and Rick Allen, R-Georgia.

The RISE Act includes provisions that have been introduced in separate pieces of legislation, including the Securing a Strong Retirement Act, often referred to as “SECURE 2.0,” in a reference to 2019’s Setting Every Community Up for Retirement Enhancement (SECURE) Act. For its part, SECURE 2.0 was passed unanimously by the House Ways and Means Committee back in May, and companion legislation has been introduced in the Senate.

For much of 2021, the relative flurry of retirement plan-related legislative activity had experts feeling hopeful that much-needed progress was right around the corner. Their hope is that SECURE 2.0 and related legislation such as the RISE Act will enable millions more workers to build savings through employer-provided retirement plans. For example, a key feature of SECURE 2.0 is a mandatory automatic enrollment provision for new retirement plans; the bill also increases a tax credit for small business owners to encourage them to offer their employees a retirement plan.

As recently as September, these and other retirement-focused policies featured prominently in the Democrats’ “Build Back Better” budget framework. In fact, an early version of the budget language dedicated the entire “Subtitle B” section to retirement-related legislative recommendations. Language in this section of the draft would have generally required small business employers to offer their employees a retirement plan. The early draft would also have set new, higher limits on contribution ranges and the amount of employees’ earnings that could ultimately be tax-deferred. Other provisions would have required automatic enrollment retirement plans to include a protected lifetime income distribution option for plan participants.

More recently, however, industry advocates’ hopes for such retirement reforms being passed as part of the ongoing federal budget negotiations have mostly been dashed. After multiple rounds of revisions, the current version of the budget legislation doesn’t include any of the aforementioned retirement-related provisions. Some insiders have pointed out that the paring back of paid family and medical leave provisions seems to have led to the retirement plan coverage expansion provisions being removed as well.

Moving forward, sources say, it is likely that two urgent fiscal deadlines—one related to the federal debt ceiling and the other to the budget—will dominate the congressional agenda for the remainder of the year, making the prospect of imminent retirement reforms less likely.

First, the latest short-term measure that is currently funding federal agencies and initiatives is set to expire Friday, which means the House and the Senate need to adopt another spending fix or risk a major disruption. Second, lawmakers must move to preserve the country’s ability to borrow to pay its bills, addressing the cap known as the debt ceiling. Sources say Washington will experience an economy-crippling default if legislators don’t reach a compromise on the debt ceiling, and they expect that fight to consume much of the remaining legislative oxygen available this year.

All in all, it appears likely that retirement reforms will have to wait for 2022. Experts also say it is more likely that reforms will be made either via standalone legislation or as part of a future omnibus bill that has yet to take shape.