Participants December 6, 2016

DC Plan Participants Would Like to Fund Emergency Savings First

Two-thirds of workers are interested in a proposal that an automatic emergency savings account could be funded up to a specific amount, after which time the money would automatically go into their DC plan.
Reported by

Both workers and employers are interested in establishing an automatic emergency savings account that would work alongside a workplace defined contribution (DC) plan, according to LIMRA Secure Retirement Institute research.

The study was inspired by Harvard University Professor David Laibson’s remarks at the 2016 Retirement Industry Conference. Laibson proposed that an automatic emergency savings account could be funded up to a specific amount, after which time the money would automatically go into a retirement savings plan. This approach could help fund financial emergencies and prevent early withdrawals of retirement funds, which can come with penalties and threaten long-term retirement security.

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The Institute’s study finds two-thirds of workers are interested in having access to an automatic emergency savings account. The research also finds 89% of employers are interested in offering the account, with larger employers more likely to be very interested.

The survey results show that the concept of the automatic emergency savings account has wide appeal. Interest in the accounts was consistent across all household income levels and DC plan participation.

Results are based on a September 2016 survey of 801 workers with access to a DC plan through their current employer and an October 2016 survey of 1,095 DC plan sponsors with 10 or more employees.

Compliance December 6, 2016

DOL Asked to Cease Implementation of Fiduciary Rule

Senator Ron Johnson asked Labor Secretary Tom Perez to cease implementation of a rule “that will very likely be rescinded.”
Reported by

Senator Ron Johnson (R-Wisconsin), chairman of the Senate Homeland Security and Governmental Affairs Committee, asked three top regulators in the outgoing Obama administration to cease implementing especially burdensome new regulations.

In one letter, Johnson wrote to Department of Labor Secretary Tom Perez about the department’s fiduciary rule. In his letter, Johnson noted that in February 2016, he released a staff report showing that the rule will likely increase compliance costs for small-business advisers, increase uncertainty in the markets and decrease the availability for investment advice for low- and middle-income Americans.

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“In light of the significant economic costs on investment markets and the substantial likelihood that the incoming Administration and the 115th Congress will unwind this burdensome regulation, I call on the Labor Department to cease its implementation of its fiduciary regulation. I hope the Labor Department will acknowledge the reality of the situation and avoid imposing unnecessary costs and burdens in further implementation of a regulation that will very likely be rescinded,” Johnson wrote in the letter.

Johnson’s letter about the fiduciary rule can be found here. More information about Johnson’s requests to Obama Administration officials is here.

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