July 24, 2013

Retirement Plans Catch the Attention of Congress (Again)

The Secure Annuities for Employee (SAFE) Retirement Act of 2013 is the latest attempt by lawmakers to address the retirement crisis in America. Senate Finance Committee Ranking Member Orrin Hatch (R-Utah) introduced the bill with the intention of helping to strengthen America’s public and private retirement systems. “These are common-sense and long-overdue reforms to our nation’s savings laws,” Hatch explained in describing his proposed law on the Senate floor. The bill addresses three main areas of reform:

Public pensions: The Act proposes the creation of a new SAFE Retirement Plan that government entities can use to provide lifetime retirement income for employees with stable costs for the employer and taxpayers. The structure of the SAFE Plan relies on life insurance companies to pay an annuity-like fixed income to retirees.

Private employer-sponsored plans: Hatch’s bill proposes the creation of a “starter 401(k),” in the hopes of making retirement savings plans more accessible to American workers. The starter 401(k) makes it easier for employers to offer a plan by relieving some of the administrative burdens and expenses.

Advice: In 1978, jurisdiction over prohibited transaction rules in relation to employer-sponsored retirement plans was given to the Department of Labor. This bill would return that jurisdiction to the Treasury Department, which would work with the Securities and Exchange Commission to create rules that preserve access to investment advice for investors in retirement plans.

The SAFE Retirement Act also includes a number of provisions intended to simplify and otherwise improve the current retirement system, such as simplifying some notice requirements, reducing restrictions on rollovers, and creating more flexible rules for distributions. For a summary of the Secure Annuities for Employee (SAFE) Retirement Act of 2013, visit: http://www.hatch.senate.gov/public/_cache/files/730c41a0-4bc6-48ba-aabf-2075b08a853c/SAFE%20Retirement%20Act%20Summary.pdf.