The ERISA Industry Committee (ERIC) Protecting Large Employer Benefits New England Employee Benefits Council Retirement and Compensation Public Policies Federal and State Analysis Collaboration Advocacy www.eric.org
Agenda • Politics driving policy agenda • Retirement Policy • Federal legislative and regulatory • Tax reform • State employee benefits Policy Driven By and For Large Employers 2
The ERIC Perspective The ERISA Industry Committee (ERIC) is the only national association that advocates exclusively for large employers on employee benefit public policies at the federal, state, and local levels • Plan Sponsor perspective • Organizations with 10,000+ employees • Members from all industries • Benefits, legal, and government relations execs Driven By and For Large Employers 3
Poli litic ical Envir ironment -- -- Snapshot • Recent events and impact on legislating • Control of U.S. House and Senate – tight margins/2018 election already started – and retirement exodus • Federal governance vs. States rights movement • Budget rules impacting legislating Polls indicate public distaste of • Campaign promises • Health care reform – anti-ACA fervor Congress and President, and that • Health care costs country is on the wrong track • Tax reform • The Wall • Trade • Immigration • Executive order on regulatory rollback opportunities • States filling the void • Not enough Administration positions filled • Federal policymakers with limited government and policy experience Driven By and For Large Employers 4
Poli litic ical Control l of f States Source: Wikipedia Driven By and For Large Employers 5
Federal Retirement Policy Driven By and For Large Employers 6
Introduced Retir In irement Poli licy Legis isla lation Bill Senate Sponsor Co-Sponsors House Sponsor Co-Sponsors Pension Budget Integrity Act (PBIA) (creates budget Sen. Enzi (R-WY) 3 Rep. Renacci (R-OH) 12 point of order for PBGC premiums) Employer Participation in Student Loan Assistance Act Sen. Warner (D-VA) 6 Rep. Davis (R-IL) 91 (extends tax break for debt) Retirement Security Preservation Act (DB plan testing for Sen. Cardin (D-MD) 1 Rep. Tiberi (R-OH) 1 frozen plans) Working Families Flexibility Act of 2017 (comp time in Sen. Lee (R-UT) 20 Rep. Roby (R-AL) 17 lieu of overtime) Portable Benefits for Independent Workers Pilot Sen. Warner (D-VA) 1 Rep. DelBene (D-WA) 3 Program Act (gig workers DoL grant) Lifetime Income Disclosure Act (mandated lifetime Sen. Isakson 1 Rep. Messer (R-IN) 7 income on 401(k) statements) Keep Our Pension Promises Act (new PBGC fund and Sen. Sanders (I-VT) 9 Rep. Kaptur (D-OH) 29 transfer from Multi to single fund) Driven By and For Large Employers 7
Legis isla lation – Retirement Enhancement and Savin ings Act t • Retirement Enhancement and Savings Act • Passed 26-0 in Prior Congress from Senate Finance Committee • What was Included? • Lifetime Income Disclosure Act – mandates plan sponsors to include lifetime income on (k) plan statements • Closed Plan Legislation (Non-Discrimination Testing) • SEAL Act (Plan Loans for Unemployed) • Streamlined 5500 Reporting for Prototype Plans • Eliminated 10% Auto Enrollment Cap • Multiple Employer Plans • How was it paid for? • Non-Retirement Related Provisions • Raised Late Filer Fees for Form 5500 to $100 Per Day/$50,000 Maximum • Budget Gimmick with Pension Premiums (accelerated payment into 2026 for 2027 variable rate premiums) Driven By and For Large Employers 8
Legis isla lation – Not Yet t In Intr troduced RETIRE Act (Receiving Electronic Statements to Improve Retiree Earnings) – Leads Rep. Polis (D- CO) and Sens. Brown (D-OH) and Enzi (R-WY) • Switches the Default to Electronic Receiving of Required Disclosures from Paper Retirement Savings Lost & Found Act – Leads Sens. Warren (D-MA) & Daines (R-MT) and Reps. Messer (R-IN), Bonamici (D-OR), and Neal (D-MA) • Mandates Social Security Administration to Create a Publicly searchable Retirement Savings Lost & Found Database; Mandates Plan Sponsors to Transfer Unclaimed Mandatory Transfers of $1,000 or Less to Database or Treasury Department for Investment in IRA Workplace Flexibility in the 21st Century Act – Lead Rep. Walters (R-CA) • Amends ERISA to include a “Qualified Flexible Work Arrangement Plan” under the definition of an ERISA plan, and preempts all state and local paid leave laws • Minimum Amount of Paid Leave must be Provided to be Exempt from State and Local Paid Leave Laws Driven By and For Large Employers 9
Tax Reform – Driv ivers and Dif ifficult ltie ies • Comparison to 1986 – why is it so different now? • Budget baseline calculation issue and budget reconciliation process • Repatriation revenue opportunity • Lower rates vs. lost deductions • Specific exclusions for employer-provided benefits include: • Coverage under accident and health plans, • Tax benefits for retirement accounts and contributions, • Accident and disability insurance, • Group term life insurance, • Educational assistance, • Tuition reduction benefits, • Transportation benefits (parking, van pools, and transit passes), • Dependent care assistance, adoption assistance, • Meals and lodging furnished for the convenience of the employer, • Employee awards, and • Other miscellaneous fringe benefits Driven By and For Large Employers 10
Big ig Revenue Targets (5 (5 year numbers) • Exclusion for employer contributions for health care , health insurance premiums and long-term care insurance -- $863B • Defined contribution plan exclusion for contributions and earnings -- $583B • Defined benefit plan exclusion for contributions and earnings -- $424B • Mortgage Interest Deduction -- $357B • Reduced rates for dividends and capital gains -- $678B • Exclusion of benefits under cafeteria plans -- $168B • Deduction for charitable contributions -- $230B (other than for education and health) • Subsidies for insurance purchased through health exchanges – $326B • Tax Social Security benefits -- $214B • Credit for children under age 17 -- $270B • Exclusion for life insurance -- $128B • Health savings accounts -- $15B Source: Joint Committee on Taxation FY 2016-2020 Tax Expenditure Estimates Driven By and For Large Employers 11
Tax Reform – What is is in in Pla lay? • “Rothification” – taxation of 401(k) plan contributions • Will this impact retirement savings? • Will lower rates make a difference? • Taxation of other employee benefits – health care? • Fringe benefit overhaul • Student loans – relief opportunity? • Executive Compensation • De-risking impact with lower corporate rates? • Trade-offs for lower rates across the board Driven By and For Large Employers 12
Federal Retir irement Regula latory Opportunit ities • Electronic reporting of required benefit statements (DOL) • Fiduciary rule (DOL) • IRS updated Mortality Tables – now at OMB proposed to be a “major” rule • IRC section 417 Minimum Present Value Changes (IRS) • Non-Discrimination Testing for Closed Plans (IRS) • PGBC Early Warning Program • “Missing Participant” rules and relief • Duplicative reporting, notice and recordkeeping requirements • Form 5500 Proposed Changes Driven By and For Large Employers 13
State Emplo loyee Benefi fits Poli licy Activity Driven By and For Large Employers 14
State Emplo loyee Benefits Poli licy Activit ity • Paid sick Leave • Paid family leave • State retirement plans Driven By and For Large Employers 15
Paid id Sic ick Leave: Common Is Issues • Definitions (e.g. “family member” and “eligible employee”) • Notice Requirements (e.g. notifying employees of the amount of leave accrued, used, and available) • Accrual of Leave • Ability to Front Load All Available Leave Before Accrual • Carryover of Unused Leave • Safe Harbor Exemptions for Existing Paid Leave Policies Driven By and For Large Employers 16
Paid id Sic ick Leave: Large Emplo loyer Prio iorit itie ies • Exempt or exclude employers from procedural requirements under the proposed law — such as notice and recordkeeping — if they provide a paid sick leave, unlimited paid leave, or PTO policy that offers equivalent or greater leave than what the law would require • Employers should be able to “front - load” all available paid sick leave that an eligible employee would be entitled to accrue over the course of a 52-week period, without being forced to allow for carryover of any unused leave • Employers should have the power to designate which classes of its employees should be eligible to receive paid sick leave, because mandating coverage for a larger class of employees could result in employers altering the total rewards or employee benefits package they offer • Employers must have the ability to establish maximums for the following: (i) the amount of paid sick leave that an employee may accrue beyond a 52-week period; and (ii) the amount, if any, of unused paid sick leave that can be carried over from one year to the next • Bona fide collective bargaining agreements should preempt any state law or rules regarding paid sick leave up and until the agreement expires, but where the agreement is silent the state law or rule should control Driven By and For Large Employers 17
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