The Retirement Enhancement and Savings Act, first introduced in the 114th Congress in the Senate, includes an array of provisions that would impact the small employer retirement plan market. (Photo: Mike Scarcella/ALM)
As was widely predicted, Democrats broke serve in Tuesday's election, winning at least 27 seats in the House of Representatives previously held by Republicans, four more than were needed to claim majority rule, according to realclearpolitics.com.
Republicans held serve in the Senate, picking up four seats, losing one, and retaining at least a 52-seat majority. Outcomes of elections in Arizona and Mississippi have yet to be determined.
While the reality of divided rule in Congress raises the prospect of legislative gridlock, many in the retirement industry expect significant retirement law will be passed, perhaps as early as in the 115th Congress' lame duck session.
“There's going to be gridlock in the next session, and little chance of meaningful new laws being enacted that would impact financial advisors,” said Duane Thompson, senior policy analyst at Fi360, a fiduciary education training and technology company.
“The exception is RESA, or legislation drawn from it,” he added.
The Retirement Enhancement and Savings Act, first introduced in the 114th Congress in the Senate, includes an array of provisions the would impact the small employer retirement plan market, the offering of annuities in 401(k) plans, required minimum distributions in IRAs, and financing of the Pension Benefit Guaranty Corp, among many other retirement policies.
“The unique thing about RESA is that it has bipartisan, bicameral support,” said Kathleen Coulombe, vice president of retirement security for the American Council of Life Insurers.
“It's been more than a decade since the Pension Protection Act was passed. RESA is the next step to address retirement security. We feel confident it will be a topic raised in the lame duck session. If it doesn't get considered, it certainly won't be because of a lack of support,” she said.
RESA's companion bill in the House has 87 co-sponsors—nearly half are Democrats.
According to Coulombe, staffers on committees with retirement policy oversight in both chambers of Congress have already had informal discussions on moving retirement legislation to conference committee.
“Staffers are doing their due diligence,” said Coulombe. “Both chambers want to be ready to go now the election is over.”
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Several core components of RESA, including provisions that would create Open Multiple Employer Plans and an annuity selection safe harbor for sponsors of workplace retirement plans, were passed in the Family Savings Act in the House this September.
Ten Democrats joined Republicans in passing the bill, noted Fi360's Thompson.
“That creates more of a cushion for compromise when a bill gets to conference,” he said. “Unless there are poison pill amendments, there's enough support in both chambers to get something through.”
While most elements of private sector retirement policy remain a last bastion of bipartisanship on Capitol Hill, Geoff Manville, principal, government relations at Mercer, cautions RESA, or any retirement bill derived from it, could certainly be stymied in the lame duck session.
“We're guardedly optimistic,” said Manville. “It will be interesting to see how RESA and the Family Savings Act get resolved in conference. But there's no requirement to take up retirement policy in the lame duck.”
The one requirement Congress does have during the lame duck session is funding the government for FY 2019.
“A spending package is Congress' top year-end priority. Period. It's the only must do item on the lame duck agenda,” said Manville.
Congress has already passed legislation funding some government agencies. But seven funding packages are still on the table, and are required to be passed by December 7. Legislation funding the Department of Homeland Security is among the bills yet to pass.
That bill could prove to be the “X factor” for retirement legislation, said Manville. Funding for the border wall, which President Trump continued to repeatedly insist on when stumping up until the election, would be included in the budget for DHS.
“If Trump insists on funding the border wall, that could shut the government down, and knock out the entire lame duck agenda,” said Manville. “There's already limited bandwidth in the lame duck session. The fight over government funding could suck up all the oxygen. That would blow everything up.”
If that were happen, the prospect of passing retirement legislation would have to be revived in the 116th Congress.
“Should time run out in the lame duck, we expect retirement legislation will be a priority in the next session,” said ACLI's Coulombe.
Rep. Richard Neal, D-MA, is expected be named chairman of the House Ways and Means Committee, where the current version of RESA is being considered.
“Retirement security has long been a priority of Rep. Neal's,” said Coulombe. “His office has told us he wants to advance RESA.”
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
