President Biden Signs Laws to Assist Retirees
On December 29, 2022, President Biden signed an omnibus spending act known as the “Consolidated Appropriations Act, 2023” which included the Secure Act 2.0, and which contains two provisions which assist retirees impacted by pension risk transfer (PRT) deals.
The first provision relates to improved transparency of information for retirees.
Section 319 directs the Treasury Department, Department of Labor (DOL), and Pension Benefit Guaranty Corporation (PBGC) to consult with “a balanced group of participant and employer representatives” and review Pension Plan reporting and disclosure requirements and report to Congress within 3 years. The purpose of this is to make recommendations to Congress on ways in which the reporting and disclosure requirements can be simplified so that retirees “timely receive and better understand the information they need to monitor their plans, plan for retirement, and obtain the benefits they have earned.”.
The second provision deals with improvements to how employers select annuity providers for PRT deals.
Section 321 directs the DOL to review the existing Interpretive Bulletin regarding Pension Risk Transfers and report to Congress within one year. This Interpretive Bulletin requires that when undertaking a PRT deal, employers must select the “safest annuity available”. Aside from this vague phrase, there are no legal limitations on the selection of annuities or insurance companies in PRT deals.
Retirees for Justice pushed hard for the review of this Interpretive Bulletin, because we believe strongly that further regulation is required when annuities are selected, to protect retirees. Not all insurance companies are created equal. If the insurance company that takes over your pension goes belly up, that is bad news for your pension payments.
Retirees for Justice will be reaching out to the DOL again to highlight retirees’ concerns about how to make the choice of safest available annuity provider more transparent and secure.
Many of the other provisions of the Secure Act 2.0 impact retirees.
A few of these that retirees may find helpful are:
- the creation of an online database of lost retirement accounts, making it easier for employees to find lost retirement accounts (Section 303);
- increase in age for required beginning date for mandatory minimum distributions to 73 beginning on 1/1/2023, and to 75 beginning on 1/1/2033 (Section 107);
- a reduction in the penalty for failure to take required minimum distributions from qualified retirement plans (Section 302); and
- after 12/31/2023, a surviving spouse can elect to be treated as a deceased employee for purposes of minimum distribution rules (Section 327).
