Executives from major insurance firms are pushing House leaders to amend tax-reform legislation to encourage the use of annuities in company retirement plans.
In a Wednesday letter to House leaders, the corporate chiefs said that they were disappointed that the Family Savings Act did not include a provision that would make it easier for employers to add annuities to savings programs they offer workers.
“While the Family Savings Act takes steps to address the need for Americans to increase their retirement savings, we believe Congress can do more to boost Americans’ retirement security through greater access to products that provide guaranteed lifetime income in retirement,” the executives wrote. “Current regulation fails to provide clear guidance to employers on how to satisfy their fiduciary responsibilities when selecting an annuity provider for their workplace retirement savings plan. In short, this broadly-supported provision would provide employers with measurable guidelines they can follow when selecting an insurance company to provide an annuity.”
The letter was signed by CEOs from AIG, Allianz Life Insurance Company of North America, Axa, Genworth Financial, Great-West Financial/Empower Retirement, Jackson Holdings, Lincoln Financial Group, MetLife, National Life Group, Nationwide Financial, OneAmerica, Pacific Life, Penn Mutual, Sammons Institutional Group, Security Benefit Life Insurance Company, TIAA, Transamerica and Voya Financial, as well as the Insured Retirement Institute and the American Council of Life Insurers.
The Family Savings Act was approved Sept. 13 by the House Ways and Means Committee as part of a three-bill package dubbed Tax Reform 2.0. The legislation, meant to build upon tax reform approved by Congress last year, heads to the House floor with significant Democratic opposition.
Although the Family Savings Act includes provisions to expand access to workplace savings plans by allowing small businesses to band together to offer them and relaxes required minimum distribution rules for individual retirement accounts, it left annuity policy by the wayside.
The provision backed by the insurance executives is part of legislation written by Rep. Tim Walberg, R-Mich., the Increasing Access to a Secure Retirement Act. It also is part of the Retirement Enhancement and Savings Act, which gained bipartisan approval in the Senate Finance Committee in late 2016 and was reintroduced in the current Congress by the committee’s Republican chairman and the top Democrat on the panel.
Proponents of the annuity provision are trying to find a way get it into the legislative mix and obtain approval before Congress recesses for the midterm elections. Although the tax package is likely to be blocked by Senate Democrats, there’s a chance that retirement legislation could advance separately.
“We’re looking to play a long game in a short period of time,” said Dan Zielinski, vice president of strategic communications at IRI. “There are still many cards to play.”
He pointed to Republican and Democratic backing for retirement policy reform.
“It’s rare to see strong bipartisan support in both chambers, and we see that here,” Mr. Zielinski said. “We think the chances are pretty good.”