Who’s Still Working for You?: American Retirement Association

In a series of articles, PLANSPONSOR is checking in with industry groups to see what work they have done, and will do, for retirement and health plan sponsors as the pandemic continues and beyond.

Over the past four years, the American Retirement Association (ARA) has increasingly turned its attention to the systemic gap in retirement plan coverage that exists among communities of color, according to Brian Graff, the organization’s CEO.

“We’ve been doing work on economic analysis, and partnering with various groups to address the problem, like the National Black Chamber of Commerce, the National Hispanic Chamber of Commerce, the Congressional Black Caucus and the Congressional Hispanic Caucus,” he says.

Graff says a lot of the work involves improving communications, because the materials that are currently out there to persuade minority small business owners to adopt retirement plans don’t seem to do the job when there is a basic mistrust of the banking system that has to be overcome.

“The 401(k) is a wonderful mechanism to introduce people to the banking system,” says Graff, “but the business owner has to get workers comfortable with the idea. A 401(k) could be the first financial account a worker has ever had.”

As part of its broader focus on expanding coverage, he says the ARA is backing two proposals. One, which is part of President Joe Biden’s Build Back Better plan, would require employers with more than five employees to have a workplace savings program. Another proposal, part of the Encouraging Americans to Save Act, introduced in Congress in July, would transform the Saver’s Credit into a Saver’s Match that would be contributed directly into employees’ defined contribution (DC) plan accounts as a supplemental match.

The Employee Benefit Research Institute (EBRI) estimates that Build Back Better plan proposals will result in $7 trillion more in retirement savings over the next 10 years.

Support for New Retirement Plan Legislation

The ARA also supports proposals that would simplify plan administration for sponsors and that would help employees with overall financial wellness, Graff says. He notes that the ARA sent a letter to House Ways and Means Committee Chairman Richard Neal, D-Massachusetts, and Ranking Member Kevin Brady, R-Texas, the sponsors of the Securing a Strong Retirement Act, outlining the provisions the group feels most strongly about.

One proposal in the legislation—referred to as SECURE 2.0—would create a retirement plan matching program to encourage employees to pay off student loans. Another provision would establish higher catch-up contribution limits for people in 401(k) or 403(b) plans who are ages 62, 63 or 64.

In an effort to simplify plan administration for sponsors, another provision of SECURE 2.0 would increase the scope of the original SECURE [Setting Every Community Up for Retirement Enhancement] Act to allow unrelated public education and nonprofit employers to join a single multiple employer 403(b) plan.

In addition to supporting proposed legislation, Graff says the ARA is pushing for new regulations for using environmental, social and governance (ESG) investments in retirement plans, which he says is a “potentially big deal.” Right now, ESG investments are not widely used in DC plans, Graff notes, because the current regulatory environment is making it difficult, but new regulations are expected to make it easier for plan sponsors to offer these investments in their DC plans. “We have been advocating on this currently, and, depending on how the regulation comes out, we will continue to weigh in,” he says.

Just last week, the DOL issued a new proposed regulation about ESG investments in retirement plans that it says would remove barriers to plan fiduciaries’ ability to consider ESG factors when they select investments.

Plan Sponsor Education

ARA also has new education programs leading to credentials for plan sponsors, notably the Certified Plan Sponsor Professional (CPSP) program, Graff says.

“We’ve also launched a conference focusing on nonqualified plans and are going to launch an ERISA [Employee Retirement Income Security Act] 403(b) conference next year,” he says. “We also have a new ‘intro to retirement plans’ course for people just getting into the industry.”

The ARA has also updated its qualified 401(k) administrator program, says Graff, making it virtual and interactive.