Legislation that will increase opportunities for people to participate in employer-provided retirement plans was introduced in the U.S. House of Representatives this week.
The Retirement Enhancement and Savings Act (RESA) of 2019 would remove restrictions on the types of employers that can band together in a Multiple Employer Plan. Allowing small businesses to band together and delegate to a professional plan fiduciary would facilitate more employers offering a retirement plan to workers. Also, RESA would permit plan participants to preserve their lifetime income investments and avoid charges and fees when an employer changes recordkeepers.
Additionally, the bill would mandate that lifetime monthly income estimates be provided on benefit statements. More than 90 percent of workers want retirement income estimates and would find them helpful, according to IRI research. Further, 75 percent of workers said they would increase their savings level after seeing these estimates.
Finally, RESA would lift the auto-enrollment safe harbor cap and the cap requiring automatic escalation of employee deferrals to no higher than 10 percent of employee pay. Participation rates are at least 10 percentage points higher in plans with automatic enrollment, studies have shown.
The bill was lauded by the Insured Retirement Institute (IRI).
“Americans today face many challenges in saving for retirement because they do not have the opportunities or access to do so through a private sector workplace retirement plan,” Wayne Chopus, IRI president and CEO, said. “The enactment of RESA would go a long way in helping Americans to overcome the obstacles they now face in saving for their retirement.”
The bill was co-sponsored by Reps. Ron Kind (D-WI) and Mike Kelly (R-PA).
“IRI is thankful to Reps. Kind and Kelly for their leadership and commitment in pursuing legislation that will help more Americans achieve a financially secure retirement,” Chopus said. “We believe the enactment of RESA will provide Americans with common-sense measures to help them address the challenges and overcome the obstacles they face as they plan and save for their retirement.”