Change is Coming to the Retirement Landscape

In recent months, there has been heightened activity in Washington DC in the area of retirement policy, with plans and proposals that could meaningfully alter the landscape. Drew Carrington, head of Institutional Defined Contribution at Franklin Templeton Investments, and Michael Doshier, vice president, Retirement Marketing, discuss the latest legislative developments and ideas.

This past year we’ve seen heightened buzz in Washington DC about retirement. Issues and proposals have included debate over the definition of “fiduciary,” treatment of multiple employer retirement plans (MEPs), and how to help more Americans better save for retirement, including those saddled with student debt.

We think the big takeaway is “Change is coming.” It’s no longer a question of if, but when. Whether legislation happens this year or next year, we are likely to see the most meaningful alterations to the retirement landscape since the Pension Protection Act (PPA) of 2006.

Retirement policy seems to come in waves about once per decade, so it appears now is the time to get things done. So, we feel now, more than ever, is the time to be engaged in the discussions. We’ve spent time in Washington talking to policymakers to help champion the cause of improving the US retirement system so that more Americans are even better prepared for the future. We will outline a few recent developments.

Department of Labor (DOL) and Association Retirement Plans (ARP)

On October 22, the DOL released proposed regulations that include a new interpretation of how “employer” is defined within the Employment Retirement Income Security Act of 1974 (ERISA). This proposal is in direct response to President Trump’s August 31, 2018, Executive Order, which directed the DOL to “clarify and expand the circumstances under which United States employers, especially small and mid-sized businesses, may sponsor or adopt a MEP,”—or as the proposal calls them, “Association Retirement Plans” (ARPs)—as a workplace retirement option for their employees, subject to appropriate safeguards.

With the proposed ARP language out for comment with a deadline of December 23, we think it’s likely we will see this new form of plan starting next year.