A legislative package aimed at expanding opportunities for Americans to tuck away funds for retirement and spur more savings for unexpected emergencies won unanimous backing from the Senate Health, Education, Labor and Pensions panel Tuesday.
The committee’s approval of the bipartisan bill (S 4353) sets it up to be combined with retirement proposals from the House and the Senate Finance Committee. The push to bolster savings has widespread backing among lawmakers and could become part of a possible year-end tax package wrapping up an array of unfinished business after the November midterm elections.
When HELP considered the retirement bill Tuesday, panel chair Patty Murray, D-Wash., pointed to the need to bolster retirement and emergency savings in the wake of the COVID-19 pandemic and amid high inflation that’s pushed up everyday costs.
“Now families are trying to recover, all the while paying more at the grocery store and the gas pump,” said Murray, the bill’s lead sponsor. “We need to help people get back on their feet.”
The bill, which was cosponsored by HELP’s top Republican, Sen. Richard M. Burr of North Carolina, would expand retirement saving opportunities by allowing charities and other nonprofits to band together with other employers and offer joint retirement plans; requiring employers to regularly prompt employees who opt out of auto-enrolling workplace retirement plans to reconsider; and mandating that part-time employees get access to their employer’s workplace savings plan after two years on the job, rather than three under current law.
The package would also allow employers to offer auto-enrolling emergency savings accounts that could hold up to $2,500 of post-tax contributions in an effort to boost the money Americans have ready for unexpected costs. Employers could automatically direct up to 3 percent of a worker’s salary into the accounts.
Federal departments and agencies would be tasked with a string of reviews, including studying how to simplify and improve reporting and disclosure rules for retirement plans.
The committee adopted two amendments to the bill before approving it, including one to let Tribal courts assign rights to retirement benefits when deciding divorce cases and another that would instruct the Labor Department to study inflation’s impact on retirement savings.
Burr raised his own addition, saying he wanted to address a lack of access to local pension plans for full-time career staff of volunteer fire stations and emergency medical services units. He hinted at a path forward for the legislation as he warned he could block the package down the line if the issue isn’t resolved.
“It will be hard for me to agree to any provision in an end of the year package if we can’t secure a fix like what’s needed in my state and probably in a majority of the states of members on this committee,” Burr said.
An attempt to add regulations requiring those responsible for managing employer-provided retirement plans to consider only “pecuniary factors” — a material impact on risk or return — when selecting investments was shot down along party lines. Under the text, fiduciaries could consider other factors if two investment options were equal, but they’d need to provide documentation on their decision making.
The amendment from Sen. Mike Braun, R-Ind., would have codified a Trump-era regulation that came in response to the rise of ESG investing, which takes into account environmental, social and governance factors. The Biden administration since reversed course, saying it wouldn’t enforce that rule and issuing its own ESG-friendly proposals. Braun’s amendment received an 11-11 vote, not enough for adoption.
Republicans have objected to ESG as an attempt to boost only “woke corporations” and politicize investments, while investment firms and asset managers that have adopted ESG say it carries financial benefit by considering factors that could pose risk to investments over the long term like climate change.
Some lawmakers are looking to pass tax legislation in the lame duck session, clearing a laundry list of outstanding tax issues before the new Congress.
Adding retirement provisions could help the effort get over the finish line because the legislation is widely popular with policymakers and championed by several retiring Republicans. That is Burr, Ohio Sen. Rob Portman, and Ways and Means ranking member Kevin Brady of Texas, who are the lead GOP members on the main trio of retirement bills.
The House passed its own retirement package (HR 2954) by a 415-5 vote in March. Portman and Sen. Benjamin L. Cardin, D-Md., have a similar measure (S 1770) that’s likely to be the centerpiece of what Finance considers. Chair Ron Wyden, D-Ore., said Finance is fielding 1,000 amendments from senators as it works toward its own markup.
HELP’s retirement package has industry backing. In a letter to Murray and Burr on Monday, groups including investment, life insurer and banking trade associations and the U.S. Chamber of Commerce endorsed the bill and pledged to work to help integrate it into a larger bipartisan retirement package.