How Secure Act Paves New Road to Retirement Income
February 25, 2020 by Michael Finke
The Employee Retirement Income Security Act of 1974, or ERISA, hasn’t done much to specifically address retirement income security in defined contribution savings plans. The United States isn’t alone in this regard. Australia’s superannuation DC system hasn’t yet solved the problem of running out of money in old age.
Will giving plan sponsors a safe harbor provision in the Setting Every Community Up for Retirement Enhancement Act of 2019, or Secure Act — which allows them to have some fiduciary flexibility with respect to annuities — herald a new generation of investment solutions that provide true lifetime income security? Or will it open the floodgates to an unwashed horde of complex and expensive products that provide little benefit to workers?
Most plan sponsors, 62%, cite fiduciary risk as a barrier to implementation, and another 69% say that administrative issues such as portability prevent them from adding annuities to a plan, according to a 2019 survey by Willis Towers Watson.
