With the focus currently on how President-Elect Biden will staff his new Administration and on the change in control of the Senate, we provide a brief review of the key Administration jobs that President Biden will have to fill, and the key Congressional leadership, that directly affect retirement savings policy, and some of the issues they will be considering.
On December 16, 2020, the Department of Labor released a final class Prohibited Transaction Exemption (PTE) allowing “investment advice fiduciaries … to receive compensation, including as a result of advice to roll over assets from a Plan to an IRA, … that would otherwise violate the prohibited transaction provisions of [ERISA] and the Code.”
Pensions experienced their strongest month of the year in November. The average duration 7 annuity purchase interest rates increased 4 basis points and average duration 15 rates increased 1 basis point since last month as seen in the below graph titled Annuity Purchase Interest Rates.
Under the proposal, employers would generally be required to maintain an “automatic contribution plan.” Failure to comply would trigger an excise tax.
Pension plans have experienced unprecedented volatility in 2020. While the market volatility has caused the treasury rates to drop dramatically, the spread between treasury bonds and the bonds insurance companies invest in have widened. The widening of this spread typically tells us that now would be a good time for pension plans to purchase annuities.
In this article we review possible retirement policy agency initiatives of a Biden Administration. We will follow up with a discussion of possible legislative initiatives when the Congressional situation becomes clearer.
On October 27, 2020, House Ways and Means Committee Chairman Neal (D-MA) and Ranking Member Brady (R-TX) released the Securing a Strong Retirement Act – a set of retirement savings policy changes with bi-partisan support. The bill builds on changes made by 2019’s Setting Every Community Up for Retirement Enhancement (SECURE) Act and may provide a template for further improvement of our current retirement savings system.
On October 30, 2020, the Department of Labor released its final rule on consideration of environmental, social, and corporate governance (ESG) factors in retirement plan investments under ERISA’s general fiduciary rules.
On June 19, 2020, plaintiffs in Hughes v. Northwestern University – an “excessive fee” case – filed a Writ of Certiorari, asking the Court to review a Seventh Circuit decision affirming a district court’s grant of defendants’ motion to dismiss.
Pension plan funded statuses have generally declined in 2020 and PBGC premiums will increase in 2021. Now may be the perfect time for your plan to reduce premiums by reducing headcounts.
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