On Tuesday, the Senate Health, Education, Labor and Pensions
Committee voted to advance the Retirement Improvement and Savings Enhancement
to Supplement Healthy Investments for the Nest Egg Act, known as the RISE &
SHINE Act.
Supporters of the bill say it will improve retirement
security by creating additional protections for workers and retirement savers
at all stages of their retirement timelines. As passed by the HELP Committee,
the bill includes many interrelated provisions. Among these are measures to
expand plan coverage for part-time workers and a new rule allowing employers to
set up automated payroll deduction emergency savings accounts for their
workers.
Passage of the RISE & SHINE Act comes some three months
after the House of Representatives passed a comprehensive retirement bill with
an overwhelming bipartisan vote. The House bill, known as the Securing a Strong
Retirement Act, similarly seeks to expand access to workplace retirement plans
and protected lifetime income products. It would also expand automatic
enrollment in 401(k) plans by requiring 401(k), 403(b) and SIMPLE plans to
automatically enroll participants upon becoming eligible, with the ability for
employees to opt out of coverage.
While it covers some of the same areas as the House’s bill,
the RISE & SHINE Act is a distinct measure. It is also different from
additional retirement legislation expected to be taken up in the near future by
the Senate Finance Committee.
As noted, some features in the RISE & SHINE Act include
new permissions for plan sponsors to auto-enroll their workers in salary
deferral emergency savings accounts, with a maximum auto-enrollment
contribution of 3%. Another portion of the bill would require that certain
part-time employees who have served 500 hours or more in the prior two years be
made eligible for participation—though such workers could still be excluded
from plan eligibility for reasons other than their part-time status.
According to a statement from Wayne Chopus, president and
CEO of the Insured Retirement Institute, the HELP Committee measure is expected
to be combined with the Finance Committee measure into one Senate bill. Per the
statement, the combined Senate bill would then need to be reconciled with the
House-passed legislation before a final bill can be voted on by both chambers
of Congress and sent to President Joe Biden for signature. Chopus said this
outcome will require a substantial amount of work by legislators over the
coming weeks and months, but he believes Congress can get the job done and
build on the legacy of 2019’s Setting Every Community Up for Retirement
Enhancement Act.
“This is a critical milestone toward addressing the anxiety
and insecurity that many of America’s workers and retirees have about achieving
a financially secure retirement,” Chopus said in the statement. “We appreciate
the leadership and hard work of Committee Chair Senator Patty Murray
[D-Washington] and Ranking Member Senator Richard Burr [R-North Carolina] to
craft and pass this important bipartisan measure.”
Eric Pan, CEO of the Investment Company Institute, says in a
written statement that the unanimous vote to advance the RISE & SHINE Act
shows that the Senate is working hard to join the House in passing much-needed
legislation to expand access to retirement savings plans and improve Americans’
ability to save. Per the statement, the ICI looks forward to the Senate Finance
Committee adding to the legislation, and the group hopes to see consideration
by the full Senate of a bipartisan retirement-savings reform package “as soon
as is practicable.”
In addition to the RISE & SHINE Act, the HELP Committee
also advanced the Increasing Small Business Retirement Choices Act. As passed
by the HELP Committee, the legislation would make it easier for small
businesses to offer more comprehensive retirement benefits to their workers by
reducing administrative expenses. According to the bill’s supporters,
currently, employers who offer 401(k) retirement plans and want to consider a
plan design change, such as the implementation of auto-enrollment or
auto-escalation, must pay out-of-pocket administrative costs upfront, even if
such changes might help employees save more money. The bill would change
existing law to allow small business employers to use retirement plan funds to
pay expenses associated with retirement plan design changes, potentially
lowering the cost of providing better plans to workers.
Chopus said he remains optimistic that Congress will send a
retirement bill to President Biden this year, noting that Tuesday’s legislative
action means Congress is “more than halfway through the process, and momentum
is on our side.”
Public comment letters from retirement security
organizations—including the ERISA Industry Committee, Insured Retirement
Institute, Pension Rights Center and U.S. Chamber of Commerce—broadly support
the RISE & SHINE Act.
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