WASHINGTON, D.C. – U.S. Senators Rob Portman (R-OH) and Ben Cardin (D-MD), both members of the Senate Finance Committee, and U.S. Representatives Pat Tiberi (R-OH) and Richard E. Neal (D-MA), both members of the House Ways & Means Committee, introduced updated legislation Wednesday designed to protect the retirement security of many American workers.  The Retirement Security Preservation Act (RSPA) amends the nondiscrimination rules that apply to qualified retirement plans to protect older, longer-service participants whose defined benefit plans have been closed or frozen. The bill builds on previous legislation and regulatory work to address this issue, and was approved unanimously by the Senate Finance Committee as part of a retirement-related legislative package in September 2016.

“This important bill will help protect the retirement security of hundreds of thousands of dedicated working families who are counting on their pension benefits in their retirement,” Senator Portman said. “There is strong bipartisan support for the Retirement Security Preservation Act in both the House and Senate, and I would urge both chambers to pass it quickly so it can be signed into law.”

“Older workers who have been saving for their retirement should not be penalized playing by the rules and planning ahead,” said Senator Cardin. “We need to get back to the original intent of the regulations, which was to encourage greater participation in retirement savings programs.  The number of workers whose savings are put in jeopardy by inaction on this issue grows each day.  The House and the Senate should consider this bill as quickly as possible to ensure the retirement security of these workers.”

“The Retirement Security Preservation Act will give certainty to longer-serving employees who have worked hard to plan and save for their retirement years.” said Congressman Tiberi. “This is a necessary fix that will prevent them from unfairly losing their pension benefits due to the IRS’s nondiscrimination rules.”

“Americans work hard to prepare for retirement, so it is absolutely critical that their nest eggs are protected,” said Congressman Neal. “This bipartisan bill would play an important role in strengthening retirement security for many Americans, and I look forward to working with my Congressional colleagues – on both sides of the aisle – to swiftly pass this measure.”

A summary of the bill can be found here.  Bill text can be downloaded here.

NOTE: The Retirement Security Preservation Act fixes outdated pension rules that no longer serve the interests of workers who are counting on their retirement savings to be there when they retire.  Here’s the issue the bill addresses:

Many companies facing long-term pension liabilities have soft-frozen their defined-benefit pension plans – that is, they grandfathered existing employees into the existing defined benefit plan, while creating a new defined contribution plan (such as 401ks) for new workers.  Unfortunately, today’s outdated pension non-discrimination rules – which were originally meant to ensure that all employees are treated equally – were inadvertently written to eventually punish companies for trying to improve their pensions.  These outdated pension rules inadvertently encourage companies to hard-freeze their pension instead – which means that all current employees stop accruing benefits in their defined benefit pensions, and move into the same defined-contribution plan as new hires.  While younger workers may benefit from this switch, older current employees will be kicked out of their defined benefit pension just as they are entering their peak-accrual years – completely undermining their retirement security.  So instead of helping older workers and strengthening their retirement security, these outdated pension rules punish them.

Senators Portman and Cardin have urged the Treasury Department to use their authority to permanently fix this problem.  While the Treasury has proposed regulations addressing the issue, its solution would help only a small portion of affected workers. The permanent fix outlined in Portman and Cardin’s Retirement Security Preservation Act would help as many as 600,000 employees, and is widely supported by members of both parties in both the House and Senate.

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