Annuities Should Be Requirement In Employee Plans
January 30, 2015 by Arthur D. Postal, arthur.postal@innfeedback.com
WASHINGTON – Insurance industry advocates are applauding the introduction of bills in the House and Senate to make it easier for small businesses to join multiple employer retirement plans, but they are also encouraging lawmakers to require annuities be one of the options for employees.
The Insured Retirement Institute (IRI) and the American Council of Life Insurers (ACLI) commended the proposals as a way to bolster the nation’s voluntary, private retirement plan system and will help encourage small businesses and startups to sponsor retirement savings vehicles such as IRAs and annuities for their employees. But IRI also said the plans should be required to offer an annuity option in their multiple employer plans (MEPs) to ensure an income into retirement.
“We would encourage policymakers to take the next step, in addition to expanding access to these plans, we recommend they ensure MEPs make lifetime income options available to workers so they can convert their savings into retirement income that cannot be outlived,” said IRI president and CEO Cathy Weatherford.
“Taken as a whole, the provisions included in this bill are the common sense modifications our retirement system needs to help workers attain financial security in retirement,” she said.
The ACLI said the legislation would encourage greater use of auto-enrollment and auto-escalation features and would allow employers to use a “stretch match,” which encourages greater employee saving to receive matching contributions from employers. Also, the ACLI said, the bill would expand tax incentives for small businesses to offer retirement plans, an important consideration for many employers. Moreover, the legislation would make it easier for more individuals to access the Savers’ Credit, helping low-income workers maximize their savings, the ACLI said.
The bills are the “Retirement Security Act of 2015,” SB 266 in the Senate and HR 557 in the House. Senate sponsors are Sens. Susan Collins, R-Maine, and Bill Nelson, D-Fla. House sponsors are Reps. Vern Buchanan, R-Fla., and Ron Kind, D-Wis.