The prospect of being able the offer a wider array of retirement plan products to a greater audience has the financial securities industry and financial advisors hailing the Retirement Security & Savings Act, a broad set of reforms designed to strengthen America’s retirement system that was introduced in the U.S. Senate last week.

The bill, introduced by Senators Rob Portman (R-OH) and Ben Cardin (D-MD), includes more than 50 provisions designed to encourage and help people who have saved too little to set aside more money for retirement. The bill would also enhance tax breaks and ease regulations to encourage more small businesses to offer 401(k) and other workplace retirement plans, including annuities.

Financial advisors are embracing the bill, especially the provision that would raise the required minimum distribution age of plan investors to 75.

“The bill would stop forcing retirement savers to take distributions at age 70 1/2, replacing that age with 75,” said Scott Barr, a financial advisor for Edward Jones in Zanesville, Ohio. “The bill will also help small-business owners establish a retirement plan by giving them a bigger tax credit to cover their plan-related expenses. This is exactly what is needed to broaden retirement coverage.”

Dave Gray, head of workplace retirement solutions for Fidelity Investments, said this bill would improve retirement security by expanding access to retirement plans, reducing costs for small businesses and streamlining disclosures.

The bill has “many common-sense changes” to current law that improve individuals’ ability to save for retirement, said Robert Higginbotham, head of global distribution at T. Rowe Price.   

Among the changes, the bill encourages sponsors to adopt automatic contribution plans with higher contribution rates, simplifies disclosures, and allows individuals saving through large 403(b) plans to enjoy the same lower costs that participants in larger 401(k) plans enjoy through the use of collective trusts.  

The insurance industry, which has also been active in lobbying for retirement reform, is supporting the bill’s provisions to ease current regulations to allow annuities to be included in workplace retirement plans for the first time. 

Specifically the bill would remove barriers for annuity contracts, change required minimum distribution rules, facilitate annuity portability and clarify current “substantially equal periodic payment” rules.

“Many Americans are living 20 years, 30 years or longer in retirement and face the real possibility of outliving their savings,” said Susan K. Neely,  president and CEO of the American Council of Life Insurers. The bill, she added, “addresses this challenge by making meaningful changes that provide more choices for people to secure lifetime income in retirement.” 

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