The House of Representatives passed the SECURE Act (Setting Every Community Up for Retirement Enhancement) earlier this year with near-unanimous support from the members (417-3). Although we are pleased to see the bi-partisan effort, is this where their energy should be focused? The bill has 29 provisions – yes, you read that correctly, 29 distinct elements that are being addressed, but regrettably, not a single one of those provisions addresses the crisis unfolding within the defined benefit space for multiemployer pensions.
Most of the Act’s focus is on the defined contribution space. We applaud the idea that part-time workers may get coverage, that small business will get some relief in establishing plans, that participants can hold off on mandatory distributions (RMDs), and that other provisions are geared to improving coverage, which remains modest, at best. However, we have millions of Americans in struggling DB plans that may lose a substantial percentage of their promised retirement benefit if nothing is done. The Butch Lewis Act (H.R. 397) is the only legislation focused on this crisis.
DC plans were never intended to be anyone’s primary retirement vehicle. They were established to be supplemental savings accounts. The problem with DC plans is that they are self-directed and funded (or not) by individuals with little discretionary income and/or knowledge of how to successfully manage the program and eventually the distribution of funds.
At least the House of Representatives has been trying to get something done to tackle retirement issues so that our workers can successfully create meaningful retirement accounts providing them with the means to retire with dignity. While the House has been busy, the Senate seems totally absent. We need true leadership at this time to address both the SECURE Act and the Butch Lewis Act before it gets too late. If I had my preference, I’d prefer to see the BLA passed first as the cost of this program grows with each passing day while the number of troubled plans expands.