Institutional Retirement Income Council Supports Retirement Enhancement and Savings Act of 2018

WASHINGTON, April 16, 2018 -- Saying the legislation will greatly enhance the retirement security of millions of Americans, the Institutional Retirement Income Council (IRIC), a non-profit think tank for the institutional retirement industry, has embraced the Retirement Enhancement and Savings Act of 2018 (RESA) introduced in the Senate last month. 

In a comment letter submitted to Senators Orin Hatch and Ron Wyden, co-sponsors of the legislation, IRIC endorsed the bill’s provisions that promote lifetime income strategies in employer-sponsored retirement plans.  Those provisions include: requiring that benefit statements show lifetime income projections at least once per year, improving the portability of lifetime income options, and providing fiduciaries a safe harbor for the selection of a lifetime income provider.

“We believe that the legislation as proposed will help encourage more plan sponsors to include lifetime income products in their 401(k) and other defined contribution retirement plans,” said Robert Melia, executive director of IRIC.  “The additional security this legislation provides is significant.  For example, when a plan offers a guaranteed minimum withdrawal benefit as an investment option, participants can receive lifetime income distributions directly from their plan instead of being forced to take a distribution and roll it over to more expense retail products.”

In its comment letter, IRIC states that the organization and its members strongly support providing plan participants with additional knowledge on their own retirement readiness through income projections on benefit statements.  IRIC believes that viewing account balances as a stream of income, in addition to the dollar amount, will be a valuable education and help participants better understand their income, security and retirement readiness.

IRIC also endorses the portability provision in the legislation, stating it will eliminate one of the barriers to adoption of guaranteed income products.

“One roadblock to adopting lifetime income products has been the concern participants would be forced to surrender their guaranteed stream of income if their employer no longer offered the product or vehicle that would provide the income, and ultimately lead to ‘leakage.’  However, IRIC doesn’t believe this will increase leakage.  In fact, we feel strongly the additional awareness of guaranteed income by participants will help abate leakage from our retirement system and lead to greater retirement security,” said Melia.

IRIC also appreciates the fiduciary safe harbors included in the legation.  In the comment letter, IRIC emphasized that leveraging state regulatory requirements is a sensible way for plan fiduciaries to ensure the financial strength of the insurer and determine that it can meet the claims paying obligation of the guaranteed products offered in the retirement plan. 

“The well thought-out representations in the legislation that the employer should receive from the insurer is a way to certify the financial strength of the insurer and will provide protections to participants while comfort to plan fiduciaries that they can safely select a lifetime income product for their plan,” said Melia. 

William Charyk, IRIC president, commented, “We favor any legislative initiatives that help promote a steady stream of income for a growing segment of the population, and prevents Americans from falling victim to the wealth effect of a large lump-sum payment and spending it too early in retirement.  In our view, RESA will help accomplish this as well as greatly enhance the retirement security of millions of working Americans.”

NOTE TO EDITORS:  To obtain a copy of the comment letter, or speak with an IRIC executive, contact Ed Emerman at Eagle Public Relations, [email protected] or 609.275.5162.

About The Institutional Retirement Income Council

The Institutional Retirement Income Council (IRIC) is a non-profit, membership-based organization of industry advisors who are dedicated to sharing best practices, informing about legislative and regulatory issues, and facilitating solutions for plan sponsors and their participants.  IRIC’s mission is to facilitate the culture shift of defined contribution plans from supplemental savings programs to programs that provide retirement security. By providing a forum for insightful, solutions-oriented thought leadership on institutional retirement income, IRIC is promoting the need for retirement income adequacy for defined contribution plan participants.  For more information, visit www.iricouncil.org.

Media Contact:
Ed Emerman
609-275-5162
[email protected]