Retirement System Gets Overhauled

An overhaul was passed by Congress to America’s retirement system, which has not been done in over a decade.  The upgraded system is aimed at helping Americans save more money for their retirement.  The population has grown, and those getting ready to retire would find that the system in place at present would leave them without income later in their retirement years.

Employers are shifting the responsibility to help their workers save accordingly.  Lawmakers were noticing the numbers were leaning toward Americans between 35 and 64 were going to outlive their retirement savings.  The nonprofit Employee Benefit Research Institute showed there was a shortfall of $3.83 trillion, and it was expected that 41 percent of Americans would run out of their retirement funds before the end of their lives.

President Trump is in high favor of this bill and is expected to sign it once it reaches his desk.  One of the provisions encourages 401(k) plans to design a replica of the pensions from the old school version and offer plans which would guarantee income for retired workers.

Another issue which was looked into is there is approximately 30 percent of private-sector workers whose employers do not have the benefit offered to their employees.  The legislation plan is making it easier for smaller companies to provide 401 (k) programs.  This would expand the retirement plan coverage by sharing administrative costs.  Asset managers, brokers, insurers, and 401 (k) record keepers would also benefit from the overhaul as well.

Annuities would be easily offered by employers.  The legislation also worked to help out retirees get these plans, which is one of the better options on the market.  It guarantees the steady flow of income with monthly payments for the rest of the retiree’s life.  If the insurer fails to make the premiums, the employer is protected under the provision from being sued.  The proper procedures must be followed for this to work.

Barbara Roper, who is the director of investor protection at the nonprofit Consumer Federation of America, stated, “Given the prevalence of high cost, low-quality annuities, we don’t start with the thought that this is a great idea.”

This was the first response when the bill passed almost unanimously in the House of Representatives back in May.  It was kicked back by the Senate for some tweaking.  There were some objections from lawmakers on a few items in the bill known as the Setting Every Community Up for Retirement Enhancement, or Secure, Act.  It was revisited recently, negotiated, and fixed to what the Senate wanted to see in the measures.

We are finding more Americans working till the age of 70, and it helps to ease up on the retirement funds from running out.  Democrat Senator Ron Wyden from Oregon, stated, “With Americans delaying retirement and increasingly working part-time, these changes will allow workers to continue to save.  While we must do more to ensure financial security for older Americans, the passage of this bill is an important step.”

Kelli Hueler, CEO of Hueler Cos., stated, “While the legislation gives employers some legal protection for their choice of an insurer, that doesn’t mean everyone is going to jump in and be comfortable offering traditional annuity products.”  She warns, “Citing a continuing wave of lawsuits over 401(k) fees, employers, especially large ones that are typically the targets of fee litigation, will take a cautious approach to add annuities to their 401(k) plans.”

Jerome Schlichter, an attorney whose St. Louis-based firm has pioneered 401(k) fee litigation, stated, “Variable annuities, in particular, can be overpriced.”  He added, “Fiduciaries would have to make the case that having a variable annuity as opposed to a mutual fund offers something significantly more to justify the higher price.  Multiple commentators have said they do not.”

In many different cases, workers and employers will have particular likes and dislike within every system.  What is impressive is how well Congress put all of this together and worked in a bipartisan manner.  Just think, if they could have done more stuff like this with the American workers and business owners in mind, how much more could be done if they had quit trying to get rid of President Trump and do their job.

This shows things in America can get fixed with teamwork and rational minds.  But now, they have to scramble, trying to get everything done before the end of the year.  The bottom line is they had three years to get this done with a president who cares.