February 2017

Coverage of legislative and regulatory developments on savings and retirement issues

The Latest

Donald Trump Signs a Presidential Memorandum on the Delay for the DOL Fiduciary Rule
On February 3, President Donald Trump signed a Presidential Memorandum directing the Department of Labor (DOL) to delay the applicability date of the fiduciary rule. The DOL is seeking to delay the fiduciary rule’s implementation, according to paperwork filed on February 9th for a 180-day delay of the implementation date of the rule and a new public comment period to the Office of Management and Budget. The DOL delay notice has yet to be published in the Federal Register.

Northern District Court of Texas Rules to Uphold the Department of Labor’s Fiduciary Rule
Chief Judge Barbara Lynn of the Northern District Court of Texas judge upheld the Department of Labor’s fiduciary rule against the U.S. Chamber of Commerce, Financial Services Institute, Financial Services Roundtable, Insured Retirement Institute, and Securities Industry and Financial Markets Association and co-plaintiffs. Read More



House Passes the Congressional Review Act
On February 15, the House considered and passed both resolutions of disapproval under the Congressional Review Act (“CRA”) to invalidate the Department of Labor’s (“DOL”) “safe harbor” regulations on Savings Arrangements Established by State and Political Subdivisions for Non-Governmental Employees. Both resolutions passed with near unanimous Republican support. 

Senate Special Committee on Aging Hosts Hearing on Stopping Senior Scams
On February 15, the Senate Special Committee on Aging held a hearing to receive an update on the work done by law enforcement officials to combat financial fraud against seniors, hear testimony from an IRS impersonation scam victim, and release updated 2016 statistics for the Committee’s comprehensive anti-fraud resource for seniors, Fighting Fraud: U.S. Senate Aging Committee Identifies Top 10 Scams Targeting Our Nation’s Seniors. Chairman Susan Collins (R-Maine) announced the Committee’s priorities during the 115th Congress as retirement security, biomedical research investments, and financial schemes and scams targeting older Americans. Ranking Member Bob Casey (D-Pa.) applauded the Committee’s reintroduction of the Senior$afe Act (S.223) to encourage financial institutions to disclose suspected exploitation of seniors and provides protection to appropriately trained staff who are reporting in good faith. Read More

Senator Grassley Introduces the Elder Abuse Prevention and Prosecution Act
 On January 20, Senator Grassley (R-Iowa) reintroduced the Elder Abuse Prevention and Prosecution Act (S.178). The bipartisan bill would prevent elder abuse and exploitation and improve the justice system’s response to victims in elder abuse and exploitation cases. The bill was originally introduced in the 114th Congress and currently has 13 cosponsors.


Regulatory Watch

SEC Issues Robo-Adviser Guidance
On February 23, the Securities and Exchange Commission published information and guidance for investors and the financial services industry on the fast-growing use of robo-advisers, which are registered investment advisers that use computer algorithms to provide investment advisory services online with often limited human interaction.

Alexander Acosta Nominated as Labor Secretary
Following Andy Puzder’s withdrawal from consideration as Secretary of Labor, President Trump nominated Alexander Acosta, dean of the Florida International University law school and former U.S. Attorney for the Southern District of Florida.


State Issues

California.  Letters opposing the use of CRA to overturn the DOL rules on state run retirement were sent from Senate President de Leon, Gov. Brown, and Treasurer Chiang.

California.  The LA Times published an Op-Ed Feb. 13 from U.S. Reps Walberg & Rooney outlining why they were sponsoring CRA legislation to overturn DOL regulations creating a safe harbor for certain state and municipality run retirement plans for private-sector workers. 

HawaiiHCR 38, offered Feb. 7 and referred to 2 Committees, calls on the Legislature to convene a retirement savings working group to investigate and identify strategies to promote greater retirement savings for private sector employees. 

IllinoisHB 2360, to amend the IL Secure Choice Program to require the Board to select a default contribution rate of 3% to 6% of an enrollee’s wages (rather than 3%) and begin the Program in 2018, rather than July 2017, was sent to Personnel & Pensions Feb. 14.

New MexicoSJM 12 (as amended), which would establish a retirement income security task force helmed by the state Treasurer to study retirement preparedness of NM residents and evaluate options for establishing a retirement savings vehicle for private-sector employees without a workplace plan, was reported out of Rules and sent to Corporations & Transportation Feb. 10.

New York StateS. 4344 / A. 4982 would create an automatic enrollment payroll deduction IRA and Board responsible for promoting retirement savings for private sector employees.  A. 4982 was sent to Gov’t Employees Feb. 6; S. 4344 was sent to Civil Service & Pensions Feb. 10.  

TennesseeSB 948 / HB 1194 would create a voluntary employee retirement accounts program to provide a group retirement program for private sector workers.  The House bill was assigned to State Gov’t Feb 15; the Senate bill was referred to State and Local Gov’t Feb. 13. 

UtahSB 109, amended and placed on 2nd reading Feb. 14, would create a $500 non-refundable tax credit for small employers who offer qualified retirement plans to employees for the first time.

VirginiaSB 1076 / HB 2204, to create a marketplace-style My VA Plan Program to enable private employers to connect with financial services firms that offer retirement plans, was tabled in House Commerce & Labor Jan. 31.

Washington StateHB 1966 & SB 5675, to permit de minimus fees and make other changes to the Marketplace law, passed from House Business & Financial Services & Senate Financial Institutions & Insurance Feb 15.

529 College Savings Plans / ABLE Plans
ColoradoHB 1007, to permit employers who contribute to an employee’s ‘collegeinvest’ savings account to deduct that contribution from their adjusted gross income, had a hearing in House Education Feb. 22.

HawaiiSB 940, passed 2nd reading as amended on Feb. 17, would provide a tax deduction up to $5K single/$10K joint for contributions to HI's 529 college savings program, beginning in 2018.

HawaiiHB 128, amended and reported out of Committee Feb. 13, would provide for a tax credit for taxpayers of 10% of the first $2.5K single/$5K joint contributed to the HI 529 plan.

IdahoHB 41, to exempt ABLE accounts when determining an applicant’s eligibility for certain programs or grants and provide for certain assistance subject to appropriation, passed the House Feb. 10 and Senate Committee Feb. 22.

IllinoisHB 3163, which would permit ABLE account contributions to be deducted from adjusted gross income, was assigned to Revenue & Finance Feb. 22. 

IllinoisHB 3179 / SB 1758 would modify the term ‘qualified expenses’ for the College Savings Pool.  HB 3179 was assigned to Higher Education Feb. 22. 

IllinoisHB 3691, to establish and fund education savings accounts to provide funds for qualified education expenses of program participants, was referred to Rules Feb. 10.

IllinoisSB 2017, to create a tax credit for contributions to ABLE accounts, was referred to Assignments Feb. 10.

MarylandSB 213, which would alter the amount the State is required to contribute to certain MD 529 account holders, had a hearing in Budget & Tax Feb. 8. 

Mississippi.  Bills to establish prepaid tuition plans and other new education savings accounts: HB 11, SB 2240, SB 2466 / SB 2247, SB 2574 (all died in Committee Jan. 31); bills to establish ABLE accounts: HB 162 (passed the House as amended Feb. 2, referred to Senate Finance Feb. 15) / SB 2311 (passed the Senate Feb. 7, referred to House Revenue & Expenditure Feb. 21).

North DakotaHB 1382, to establish and fund education savings accounts to provide funds for qualified education expenses of program participants, passed the House Feb. 14 and was referred to Senate Education Feb. 17.

VirginiaHB 1959, to provide a 30% credit for employer contributions up to $1,000 for a student intern's VA College Savings Plan contribution, was left in Finance Feb. 7.

Washington StateHB 1425, to create the WA next generation educational savings account pilot program, has a Higher Education hearing Feb. 17.


Noteworthy Facts & Figures

U.S. Chamber of Commerce Hosts Event on Retirement Outlook
On February 3, the U.S. Chamber of Commerce held an event focusing on the shifting paradigm of retirement. Aliya Wong, U.S. Chamber of Commerce’s Retirement Policy Executive Director, presented the Chamber’s recommendations in developing a private sector driven policy solution focusing on achieving retirement security for worker. Wong focused on strengthening the voluntary employment-based retirement benefits system and enhancing retirement security for workers, while proposing solutions to address our country’s evolving workforce as demographics continue to change.” Brian Reid, Chief Economist at the Investment Company Institute, discussed the challenges and risks of state-sponsored plans. Reid noted that, state-sponsored plans have many untested features adding that, “state and local governments have no experience with auto-enrollment plans.” Read More

T. Rowe Price Survey Analyzes the Sentiments of Pre-Retirees
T. Row Price developed a study in response to Americans living longer and the need for extra planning for retirement. More than half (55%) of participants stated that an additional 30 years of life would be “both a blessing and a curse,” noting potential health issues during the later years may outweigh the benefits of living longer. Gen Xers (37%) were more likely to label it a blessing compared with Baby Boomers (29%).  The study also saw generational differences as they relate to retirement planning habits. For instance, the amount to which investors review their accounts increases with age. About 57% of 36 to 49-year-olds said they reviewed their investment accounts at least once a month. That number jumped to 66% for investors in the 60 to 64-year age group. Gen Xers (43%) are also more likely than Baby Boomers (24%) to say online investment platforms and apps have changed the way they approach investing.

National Endowment for Financial Education Studies Why Financial Literacy is Crucial for a Robust Pension System
The National Endowment for Financial Education (NEFE)’s research highlights that many young Americans are financially illiterate. Research found that only one in ten students demonstrate the highest level of financial literacy, and 18% score below the baseline level of financial literacy proficiency.  24% of millennials could answer questions about basic financial matters, with only 8% showing a high level of knowledge while 69% gave themselves high marks for their knowledge. The study stressed that little empirical evidence has been collected to help us understand the determinants of financial literacy among young people, and little research has focused on the implications of financial literacy for the pension landscape.



ERISA Advisory Council Meeting
The newly appointed 2017 ERISA Advisory Council will be hosting its first meeting on March 22nd. The 2017 ERISA Advisory Council will reach a consensus to focus on issues important to the administration of ERISA, historically three to four issues each year. For each issue, the council defines the issue to investigate, takes testimony from witnesses, and submits a report of findings and recommendations.



Sign up for SIFMA's Signature Executive Education Program, SII at Wharton
The Securities Industry Institute® (SII) is the premier executive development program uniquely tailored for financial services professionals. For more than 65 years, SIFMA and The Wharton School of The University of Pennsylvania have partnered to equip SII participants with practical information, ideas and answers directly applicable to their present and future responsibilities. Registration is open for the March 5-10, 2017 program. Visit our website to learn more.

SIFMA’s C&L Annual Seminar: Join 1800+ C&L Professionals in San Diego - Mar. 19-22
There is only one month left to register for SIFMA’s C&L Annual Seminar - the financial services industry’s premier event for compliance and legal professionals. Join industry experts, thought leaders, regulators, and more during our robust, three-day program on March 19-22 in San Diego! Hotel rooms still available.

Mark Your Calendar: Regional Senior Investor Protection Workshop
Join SIFMA on May 2 in Philadelphia for our second Senior Investor Protection Regional Workshop! Following the success of our first event last fall, this interactive program provides attendees with the opportunity to take a deeper-dive into the causes of cognitive decline, learn how to identify decline and exploitation, and learn practical ways to establish an effective client protection program.

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