Yahoo Finance Are retirement reform efforts in DC ‘going nowhere?’
Back in 2019, Congress passed the landmark SECURE act which was the first major retirement legislation in 13 years. Lawmakers soon embarked on a follow-up called the “Secure 2.0 process” to try and keep the momentum going. But since passing an initial bill passed out of the committee almost a year and a half ago the effort to prod more Americans to save for retirement and increase flexibility for current savers has been plagued by stops and starts.
Again and again, other priorities on Capitol Hill have crowded out the effort. As the 117th Congress nears an end, advocates are now making one final push before the end of the year.
But it might be an uphill battle.
“It's all just spitting in the wind,” said Sen. Roger Marshall (R-KS) of the effort to get traction for the bill during a recent interview. He added: "it's going nowhere, this was not a priority for this president or the Senate so it was turned into more of a messaging bill."
Marshall is one of an array of lawmakers trying to meld the different bills into a single piece of passable legislation. Some are more optimistic in the week's ahead, but the frustration was palatable during his recent conversation with Yahoo Finance’s Rachelle Akuffo.
“It's dead at this point in time,” the Kansas Senator said.
Meanwhile, it’s not just Republicans who are pessimistic about where things stand. Teresa Ghilarducci is a left-leaning labor economist at the New School and she also distanced herself from the latest negotiations in Washington. “I think a lot of the worst ideas in the bill have gotten preserved and some of the best ones have got thrown out,” she said.
What's currently left in the bill would could make inequity among retirees “much, much worse,” she added, Ghilarducci cited provisions like one that would allow people to delay collecting from their retirements plans until age 72 which, she noted, will only help those who "have a lot more in their accounts."
The comments from Marshall and Ghilarducci and others were featured in a new webinar released this week on how inflation is disrupting retiree finances and cracks in the U.S. retirement system. The hour-long program was produced by Yahoo Finance in partnership with the Bipartisan Policy Center’s Funding our Future alliance as well as the The Alliance for Lifetime Income.
The debate
Despite the pessimism, if lawmakers can get an effort over the finish line before the end of the year, it would likely touch a wide swatch of Americans from current retirees wrestling with required minimum IRA or 401(k) distributions to young savers eager to link retirement savings with their student loans to poorer Americans who struggle to save for emergencies
But it’s a complicated effort even by Capitol Hill’s standards. Four congressional committees are directly involved and countless lawmakers having contributed ideas over the nearly three years of debate.
Recent data from the Bureau of Labor Statistics finds that only a bit over half of private sector workers participate in a retirement plan at work. Many don’t participate because they have no access, while others simply haven’t signed up for available benefits.
Another possible provision would spur employee participation in emergency savings plans alongside retirement savings. “I was really excited about this rainy day fund,” said Sen. Marshall “because we all do have a rainy day at some point in time.”
Advocates will be up against the clock in coming weeks. This year’s ‘lame duck’ session is shaping up one of the most grueling in recent memory with Congress tasked with avoiding a government shutdown, passing the annual defense bill, voting on codifying same-sex marriage into law, reforming the presidential electoral process, and now providing relief following Hurricane Ian.
Observers said lawmakers could be in session through Christmas as is, making it unclear whether retirement reform will be able to fit onto the docket.
Critics of ‘weak and watered down’ provisions
Andrew Biggs is another influential voice in the retirement debate. The senior fellow at conservative-leaning American Enterprise Institute had little positive to say about where the bill stands. The provisions in the bill to increase automatic enrollment in retirement plans, he said, have become “so weak and watered down [that] I don't think they're going to have any effect on retirement savings.”
But others are more optimistic that compromise is possible. For instance Rep. Kevin Brady has been a key driver of retirement reform efforts for years. He's retiring this year and hoping for one more retirement bill before he leaves Congress. In a recent Yahoo Finance conversation, he touted provisions that would impact student debt saying “it will help, it brings a private sector approach to helping students with their debt while also helping them begin to save for the future and for their retirement.” He added: “this is a bipartisan approach.”
It’s the history of bipartisan agreement on the issue that is keeping hope alive. Ida Rademacher, executive director of the Aspen Financial Security Program, said in this week’s webinar that her sense from talking to stakeholders is that hope is far from gone. One reason for optimism: a range of bipartisan votes to move forward on certain pieces of the reform effort.
“I do think that there's momentum,” she said. “People are starting to make this kitchen table issue a national policy issue that can get bipartisan support.”
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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