5 big stories to watch in retirement in 2015

1. A fiduciary standard for all?

The DOL is expected to release its universal fiduciary standard for all securities brokers early next year, after more than four years of proposals and frantic pushback from industry. Now called the "conflicts of interest" rule, there will be heavy lobbying against it, congressional hearings and plenty more drama. Ultimately, the rule's implementation could be stalled for the remainder of the Obama administration and, if a Republican takes the White House in 2016, well, then, all bets are off.

2. Retirement reforms

Both chambers of Congress flexed their muscles on the issue in 2014, suggesting 2015 could very well see legislators' continued focus on the issue. Some reforms, like President Obama's myRA plan, is scheduled to begin in earnest. Also, maximum 401(k) contributions are going up, and COLA adjustments to Social Security have been scheduled. More comprehensive changes of the kind Congress will need to enact also are on the table. Some, like expanding open multiple employer plans to small businesses reluctant to offer plans because of cost and liability fears, enjoy bipartisan support. Sen. Orrin Hatch of Utah says advancing his SAFE Retirement Act will be a top priority. His plan would be a windfall to the life insurance industry, as annuities would be used to both shore up underfunded public pension plans, and more accessible to enrollees in defined contribution plans. 

3. Tax reforms

The Office of Budget and Management has estimated that federal taxes deferred by defined contribution plans in 2015 are projected to be worth $61 billion. Some lawmakers see that as a problem. Hatch referenced the issue in an interview with BenefitsPro prior to the midterm elections, suggesting the prevalence of slogans like "upside down tax incentives," "pension stripping," and "the system is rigged," are evidence that the traditional bipartisanship on retirement incentives are threatened. Freezing contribution levels in 401(k) plans would create more income for the feds to tax. Some have calculated that doing so could raise $63 billion over 10 years. Billions more could be raised by mandating some portion of contributions go to after-tax Roth IRA accounts. A lot, of course, is at stake.

Photo: Sen. Orrin Hatch, R-Utah.

4. Multiemployer plans

A proposal to give multiemployer plan trustees the power to cut benefits for existing retirees by 10 percent has been sold as a necessity to keep the most critically underfunded pensions solvent. It's been promoted by the National Coordinating Committee for Multiemployer Plans and in the "Solutions Not Bailouts" proposal, which is backed by a consortium of labor and private sector interests. Now the question is, what will Congress do?

5. Annuities in DC plans 

The Society of Actuaries' most-recent mortality assumptions show the average 65-year-old is expected to live to be 86.6, and the average 65-year-old female is expected to live to be 88.8 years old. That's an increase of 2.0 and 2.4 years, respectively, and it adds to the longevity risk already challenging the retirement landscape. Treasury and the DOL paved the way in 2014 for greater availability of deferred-income annuity contracts to 401(k) investors, as well as the incorporation of guaranteed income products in target-date funds. Some experts have said the adoption of annuities may be easier said than done. Sponsors will have to invest significantly in employee education, as understanding of annuities is generally low. Still, 2015 could be the year in which annuities in DC plans become a more common sight.