Congress to DOL: Design Retirement Plans for Gig Workers!
What You Need to Know
The provision is a child of the Portable Benefits for Independent Workers Pilot Program Act proposal.
Lawmakers put it in an explanatory note attached to the 2022 spending package.
The original pilot program proposal could have created a vehicle for providing everything from a retirement savings vehicle to life insurance.
Lawmakers want the U.S. Department of Labor to develop new benefit program ideas aimed at gig workers.
House negotiators made that clear Wednesday, by putting a section about “worker access to retirement plans and other benefits” in the explanatory notes for the $1.5 trillion Consolidated Appropriations Act, 2022 spending package.
The current federal spending law expires Friday. Congressional leaders hope to pass a short bill that will keep the government open until March 15, and have the Senate pass the CAA, 2022 package by March 15.
The Senate could approve the current version of the package as is; make changes, and send the revised package back to the House for final approval; or reject the package and start a rush by lawmakers to develop a new spending package.
The package comes in the form of an amendment to H.R. 2471, a bill that relates to development projects in Haiti.
House members approved the amendment by a 260-171 vote late Wednesday night.
The bill received support from 39 of the 210 Republicans who voted, including Rep. Kevin Brady, R-Texas, the highest ranking Republican on the House Ways and Means Committee.
The relatively high level of support for the bill in the House suggests that it might have a good shot at getting through the Senate.
Here are five ways for retirement planning specialists to prepare themselves, and their clients, for the possibility, that the retirement plan lab note could soon be attached to a federal law.
1. Take the note seriously.
The retirement plan lab note is just a small part of thousands of pages of documents associated with the CCA, 2022 package, but Congress has often bundled major pieces of legislation into similar “omnibus” spending packages.
In late 2019, for example, Congress used the Consolidated Appropriations Act of 2020 to pass the Setting Every Community Up for Retirement Enhancement Act of 2019.
2. Understand that the lab could surprise its creators.
The retirement plan lab provision in the spending bill is a child of the Portable Benefits for Independent Workers Pilot Program Act bill, which was introduced as H.R. 6767 in the House and as S. 3674 in the Senate.
The bill has four Democratic cosponsors in the House. In the Senate, the list of co-sponsors includes one Democrat, an independent who caucuses with the Democrats and three Republicans — John Hoeven of North Dakota, Ben Sasse of Nebraska and Todd Young of Indiana.
The bill calls for the Labor Department to provide $20 million in grants for efforts to create portable benefits pilot programs that could meet the needs of independent workers and then to report to Congress on the results.
In the past, the lead sponsor of S. 3674, Sen. Mark Warner, D-Va., has talked about creating portable retirement accounts that would be administered by an independent board and managed by selected financial institutions.
But the new CAA 2022 does not talk about what entities would administer or manage the plans spawned by the new retirement plan lab.
3. Think about grandfathering.
If the new retirement plan lab ends up creating new types of programs that could cause problems for some types of retirement savers, the Labor Department will likely include a “grandfather” provision letting savers keep the plans they already have when it drafts the implementing legislation.
Retirement professional and retirement savers groups could end up clashing over just how long grandfathering will last and whether there are any limits on grandfathering.
4. Consider flexibility.
If any attractive new retirement plan models or other benefit plan models become available, clients may want to avoid locking themselves into using other types of arrangements.
5. Watch for opportunities to provide new types of products and services.
Retirement, insurance and benefits professionals may get new opportunities to capture clients’ and prospects’ attention from the arrival of any new portable plan options.
In some cases, some financial professionals may also end up with opportunities to run new types of portable plan programs, or to ally themselves with other players that end up with new program management opportunities.
(Image: Adobe Stock)
