Fighting for Retirement Savers During a Global Pandemic
The economic hardship created by the COVID-19 pandemic harmed the financial lives of millions of Americans. As retirement savers work to weather the storm, ICI advocated—and continues to advocate—for relief and flexibility during these challenging times. Engaging key policymakers and regulators, ICI provided research, education, and expertise during critical moments of debate about how Congress and the administration should respond to this crisis.
Helping Savers Through the CARES Act
ICI advocated strongly for the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law on March 27, 2020. ICI and member firms provided deep expertise and reliable research to lawmakers as they drafted this legislation. The result was a bill that provided essential relief to retirement savers. It paused required minimum distributions (RMDs) from individual retirement accounts (IRAs) and 401(k)s for one year and waived loan penalties and increased loan limits for families facing financial hardships because of the COVID-19 pandemic. These provisions were critical to many American families during this challenging time.
Advocating Catch-Up Assistance
As the health crisis and resulting economic hardship continues, ICI’s Legal, Research, and Government Affairs Departments developed a proposal to help American families get their retirement savings goals back on track over the coming years. ICI’s government affairs team is engaging policymakers, advocating that the proposal—called the “Temporary Coronavirus-Related Catch-Up Contribution” proposal—be considered for any future relief legislation.
The proposal would allow workers who were adversely affected by COVID-19 to make additional contributions of up to $6,000 annually—for three years beginning in 2021—to their retirement accounts, including their 401(k)s, 403(b)s, 457(b)s, SIMPLE plans, or IRAs. The proposal would be available to qualified workers regardless of age, and would permit employers to match their employees’ catch-up contributions.
Delivering Reforms for Savers
ICI is also engaging lawmakers and closely tracking a “Retirement 2.0 package” being discussed by House and Senate tax writers. A sequel to the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act, this legislation may include provisions to increase 401(k) catch-up contribution limits for individuals older than 60 and to allow employers to make an additional contribution on behalf of employees in a small business SIMPLE plan. ICI’s government affairs team remains engaged with lawmakers as the process moves forward.
Moving Forward
As the United States recovers from this unprecedented health and economic crisis, ICI will continue engaging policymakers, regulators, and other stakeholders to ensure the voice of the regulated fund industry and retirement savers is heard.
Modernizing E-Delivery Rules for Retirement Savers
DOL Brings Delivery Rules into 21st Century While Protecting Savers’ Right to Get Paper
For years, ICI tirelessly worked to promote and advocate electronic delivery of plan communications for 401(k) participants. This year, the efforts led to a big win for American retirement savers and the funds and managers who serve them. The Department of Labor (DOL) issued a final rule in May to modernize outdated 401(k) plan notice delivery rules and promote greater use of electronic communication, while still allowing participants to receive paper copies if they prefer them.
Through academic studies (in 2011 and a 2018 update), meetings with the DOL, and comment letters, ICI pressed the DOL to update its e-delivery rules. The Institute also promoted a corresponding e-delivery legislative effort through congressional testimony and worked to prevent any action on Capitol Hill that would block the rule.
The DOL’s commonsense rule brings retirement plan communications into the 21st century and leads to better outcomes for participants. ICI will continue to monitor and engage with the DOL as it implements this important rule.
Informing Pension Reforms Across the Globe
As policymakers and thought leaders examine pension systems and consider pension reforms, ICI continues to advocate for sound policies and to use its research to help stakeholders better understand the components of a successful retirement system and the important role that regulated funds play in helping investors build retirement savings.
Europe
Policymakers continue to work on implementing a pan-European personal pension (PEPP) product—a voluntary savings vehicle that investors can take with them across member states. Though ICI is hopeful that PEPP can succeed, it is unclear if providers can create a viable product under the enacted framework, because it may be too rigid to yield products that will be attractive to savers or PEPP providers. Although ICI strongly advocated for a more flexible framework, the current framework includes mandatory advice and a fee cap on the basic investment option. ICI continues to urge policymakers to revise the framework as part of their work on the capital markets union.
Asia-Pacific Region
To assist members’ advocacy efforts and inform policymakers’ work, ICI is creating pamphlets on different jurisdictions’ systems in the Asia-Pacific region, and short documents about the “keys” of a successful retirement system. The first completed pamphlet describes the Japanese retirement system, and includes a list of resources that members can use to access further information. Additionally, ICI completed two “keys” focused on contributions and on investment choices. These and other materials will help ICI and its members to facilitate future discussions with policymakers in Japan and other countries.