Even though the ink is barely dry on the SECURE 2.0 Act, there’s no rest for the weary, as some in Washington are pushing a federal government-run retirement system that would unfairly compete with the private sector, warned Brian Graff at the April 2 opening session of the 2023 NAPA 401(k) Summit in San Diego.
In the “From the Hill to the Summit” session, Graff, who serves as CEO of the American Retirement Association (ARA) as well as Executive Director of NAPA, was joined by Nevin Adams, former Chief Content Officer of the ARA, where they discussed the latest legislative, regulatory and litigation developments in the industry, offering key takeaways for plan advisors.
But the biggest hot-button issue was over the battle over the retirement system, where Graff explained to the packed room of Summit attendees that a well-financed think tank has been pushing a proposal for a federal retirement savings program run by the Treasury Department.
One of the reasons prompting the interest in a government-run solution is the ongoing coverage gap of 60 million people that exists, which is particularly problematic for black Americans, 52% of whom lack access to a plan, he explained.
“At some point, people in Washington D.C. are going to grow tired of this systemic coverage gap and they're going to start pushing for some type of federal intervention,” Graff noted. And while he thought there might be some leeway to give the SECURE 2.0 provisions a chance to see if they might make a difference, there was no such luck, he observed.
“We are beginning what I expect will be a continuous battle over the next several years over the future of America's retirement. Fundamentally, it will be debated as to whether the retirement plan system that we know should continue to be controlled by the private sector, or should the federal government.”
Among the concerns from a private sector standpoint is the unfair competition that would result from a federal government program under the proposal, including that it would be exempt from ERISA, as well as the nondiscrimination requirements. Additionally, the federal government would be making matching contributions and not the employer.
What’s more, the proposal has bipartisan support on Capitol Hill and was introduced as legislation (the Retirement Savings for America Act) last December. Graff noted that he expects the bill—which was sponsored in the Senate by Sens. John Hickenlooper (D-CO) and Thom Tillis (R-NC), and in the House by Reps. Terri Sewell (D-AL) and Lloyd Smucker (R-PA)—to be reintroduced in a matter of weeks.
“I’m not panicking that this will become law this year or next, but what we should be worried about is that there’s actually bipartisan support for a federally run retirement system subsidized by the federal government,” Graff stated. Signaling to the Summit attendees, Graff emphasized that “We need to make clear that a federally run retirement system will never be acceptable.”
Adams’ Tribute
Meanwhile, Graff and Adams did turn to the nuts and bolts of what’s happening with SECURE 2.0 implementation, the debate over ESG, litigation landmines and what a new fiduciary rule from the Department of Labor might look like, but a tribute to Adams on his “self-styled” retirement and his contributions to the industry and the ARA got the audience on its feet for a standing ovation.
In what was a rather touching but humorous moment, Graff presented Adams with a miniature statue of the “hang-loose” hand sign in thanking him for his service to which the ARA’s former Chief Content Officer was clearly moved.
“When you get to the point in your life where all your finances are good, the only reason it happens is because of the work that people like you all do,” Adams told the attendees. “When working with somebody individually, you help them make that goal. You've seen them turn things around. It’s good—that's the thing that sort of verifies your existence. But the beauty in talking to you all and events like this is that it's clear that we're all part of this together. And it gives me the feeling that I'm actually helping you help so many more people,” he explained in thanking Graff and the NAPA nation.
