December 2016

Coverage of legislative and regulatory developments on savings and retirement issues

The Latest

DOL Issues Final Rule on the Expansion of State Run Retirement Plan Guidance
On December 20, the U.S. Department of Labor (DOL) issued its final rule on the expansion of state run retirement plan guidance. The final rule contains an amendment to a final regulation that describes how states may design and operate payroll deduction savings programs for private-sector employees, including programs that use automatic enrollment, without causing the states or private-sector employers to have established employee pension benefit plans under the Employee Retirement Income Security Act of 1974 (ERISA).

D.C. Appeals Court Denies Fiduciary Rule Injunction
On December 15, the D.C. Circuit Court of Appeals denied a motion for an emergency injunction of the DOL’s fiduciary rule by the National Association for Fixed Annuities (NAFA). In November, a district judge denied a request from NAFA for a preliminary injunction and granted summary judgment to the DOL, after which NAFA requested an injunction pending appeal from the D.C. appeals court.



Senator Collins Delivers Floor Statement on the Senior$afe Act
On December 8, Sen. Susan Collins (R-ME), the Chairman of the Senate Aging Committee, took to the Senate floor to express her frustration in the Senior$afe Act’s failure to past the Senate. Collins said, “I am greatly disappointed that we have been unable to overcome objections from just one Senator from the other side of the aisle who is blocking the passage of the Senior$afe Act, legislation I introduced to help protect our seniors from financial fraud and exploitation.” The bill would help give financial professionals the tools they need to protect senior clients by allowing firms to disclose cases of potential senior financial exploitation to certain agencies without fear of legal ramifications.


Regulatory Watch

Form 5500 Comment Letter Submission
On July 11, the DOL, the Internal Revenue Service (IRS), and the Pension Benefit Guarantee Corporation (PBGC) proposed revisions to the forms and regulations governing the Form 5500 annual reporting process for employee benefits plans. SIFMA submitted comments on December 5. SIFMA raised concerns that the DOL did not allow adequate time for such extensive revisions and request that the DOL re-propose for additional review and comment. SIFMA also expressed concern that the proposed revisions to the Schedule C would have the unintended consequence of significantly expanding and complicating the data that service providers are currently required to provide. The letter furthermore expressed concerns that the proposed revisions to the Schedule H related to participant-directed brokerage accounts would significantly increase costs for plan sponsors. Finally, SIFMA recommended that clarifying changes be made to certain definitions.

GAO Releases Study on 401(K) Plans: Effects of Eligibility and Vesting Policies on Workers' Retirement Savings
The U.S. Government Accountability Office (GAO) surveyed 80 401(k) plans ranging in size from fewer than 100 participants to more than 5,000 and its review of industry data exposed that many plans have policies that affect workers' ability to: 1) save in plans (eligibility policies); 2) receive employer contributions; and 3) keep those employer contributions if they leave their job (vesting policies).


State Issues

Iowa.  LD 1295, a draft bill introduced Dec. 13, would create a state-run retirement savings program in Iowa.

Maryland. In accordance with Chapter 323, enacted earlier this year, the Maryland Small Business Retirement Savings Board held an organizational meeting on November 17th.  The meeting included a presentation by Committee staff of the new law.  The next meeting of the Board will be held on December 19.

529 College Savings Plans
ArkansasHB 1020, a minority-sponsored bill introduced Nov. 22, would create the General Assembly Promise Lottery Scholarship Program to provide funds to every child born in Arkansas to be used for college tuition.

UtahHB 24, which would establish tax-advantaged college savings accounts for certain high-school students and provide various features – including payroll deduction and a state tax credit – was publicly distributed and sent to the relevant agencies for fiscal input.


Noteworthy Facts & Figures

Merrill Edge Study Finds that Young Workers will not Experience Traditional Retirement
Merrill Edge’s Fall report acknowledges that younger generations may never experience a traditional retirement.  The report added that while most of today’s retirees (83%) are not currently working, the majority (83%) of millennials plan to work in retirement whether for income, to keep busy or to pursue a passion. Edge found that the majority (70%) of millennials describe their investment approach as “hands on,” compared to 60%of all respondents thus leading to increasing the desire for further financial guidance and validation from professionals.

Outlook of Retirement Savings in 2017
According to a Nerdwallet’s end-of-year survey, 30% of Americans report they are currently not saving for retirement at all, including 43% of millennials ages 18 to 34. The survey found that, “of those with workplace retirement accounts, only 32% say they plan to increase their contribution next year, despite the facts that employer surveys show U.S. companies plan to pay out raises averaging 3% and median income, as reported by the U.S. Census Bureau, is up.” Nerdwallet’s results displayed financial anxiety amongst savers for the new year.



Visualizing Your Future to Save More for Retirement
Researchers have found that connecting people to an older version of themselves using virtual reality technology can help boost saving behaviors. “Virtual experiences are very intense and can have a deep and long-lasting behavioral change in the real world,” said Stanford University’s Jeremy Bailensen. In this Project Invested article, learn how this might be an effective way for financial and investment advisors to help younger clients think clearly about how their current spending and saving behaviors will affect their long-term prospects.



115th Congress Resumes
The first session of the 115th Congress resumes on January 3, 2017.



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.

C&L Annual Seminar 2017: Join Us in San Diego, Mar. 19-22
This premier event for compliance and legal professionals working in financial services provides an opportunity for the industry’s leaders and regulators to come together to educate, share ideas and address emerging trends impacting the compliance and legal community. Keynote speakers include: Preet Bharara, United States Attorney of Southern District of New York, U.S. Department of Justice; Robert W. Cook, President and Chief Executive Officer of FINRA; Suni Harford, Regional Head of Markets, North America, Citi; and Jan Lynn Owen, Commissioner of California Department of Business Oversight. Early bird rates available!

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