Hatch’s SAFE act makes good sense

Whether desirable or not, pressure sometimes finds its way down from the very top, through the cabinet members, and ultimately to the ranks where guidance is written and issued.  

Many believe, for example, that the Department of Labor's highly unpopular fiduciary definition guidance was first withdrawn – and then subsequently kept on hold – for political reasons in the presidential election year of 2012, and through 2014.  It now appears that at the end of this administration, a strong push to issue this guidance is at hand.

But the intersection of presidential power and regulatory action can work both ways. 

Prior to the 2012 and 2014 elections, the White House had reason to temper aggressive regulatory actions, for fear of election losses. That is less a concern, at least at the presidential level, since our president cannot run again for re-election. 

Perhaps because of this, we have already seen bold – some would say excessively bold – moves taken by executive action. The last two years of a president's term are sometimes the period in which the country's top leader seeks to leave his stamp on the nation, and it could be so with regulatory actions that are favored by the current administration. The proposed fiduciary regulation may be a good example of this. 

One consideration that could temper aggressive executive and regulatory activism in the next two years is a weighing of the odds for the 2016 election, with the obvious concern that unresponsive or uncompromising regulatory action could weigh against Democratic candidates in both congressional and presidential elections.

Despite the difficulty of governing with a divided, polarized government, one bright spot for the coming Congress is the elevation of Sen. Orrin Hatch, R-Utah, to chairmanship of the Senate Finance Committee. 

Sen. Hatch has substantial credentials when it comes to retirement issues, and his committee plays a key role where retirement savings-related legislation is concerned.  In the last session of Congress Sen. Hatch introduced the Secure Annuities for Employee Retirement Act, and it will be one of his priorities in the 114^th Congress.

But don't let that title fool you; the bill is not only, or primarily, about annuities. 

Yes, the legislation advocates that retirees have access to investment options that can provide lifetime income. In that respect it reflects the philosophy of the current qualifying longevity annuity contract (QLAC) regulations.

But Sen. Hatch's bill goes way beyond the annuity dimension. 

It encourages greater use of automatic enrollment and automatic escalation of contributions in deferral-type plans. It simplifies plan testing, reporting and disclosure. It enhances the popular and successful 401(k) safe harbor plan, enhances the portability of lifetime income options from employer plans to IRAs, and offers numerous other positive – some might say overdue – retirement savings enhancements.

Whether these exact provisions are embraced, or refined, or in some form eventually become law, is of course uncertain. 

In the current political environment an odds-maker would probably not give any legislation a high probability of success. But if legislation such as this fails it won't be for lack of vision and effort.

Sen. Hatch seems to have "the right stuff" to lead on the retirement savings front. Whether others will have the good sense to follow is, of course, another question.