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Our Perspective

Biden Administration agency agenda

In this article we review possible retirement policy agency initiatives of a Biden Administration. We will follow up with a discussion of possible legislative initiatives when the Congressional situation becomes clearer.

SECURE 2.0 – the Securing a Strong Retirement Act

On October 27, 2020, House Ways and Means Committee Chairman Neal (D-MA) and Ranking Member Brady (R-TX) released the Securing a Strong Retirement Act – a set of retirement savings policy changes with bi-partisan support. The bill builds on changes made by 2019’s Setting Every Community Up for Retirement Enhancement (SECURE) Act and may provide a template for further improvement of our current retirement savings system.

DOL releases final ESG rule

On October 30, 2020, the Department of Labor released its final rule on consideration of environmental, social, and corporate governance (ESG) factors in retirement plan investments under ERISA’s general fiduciary rules.

October 2020 Pension Finance Update

Stocks slipped again in October, producing modest declines for pensions. Both model plans we track lost less than 1% during the month. For the year, Plan A is down more than 5% and Plan B is down almost 2% through the first ten months of 2020.

Supreme Court review of excessive fee litigation?

On June 19, 2020, plaintiffs in Hughes v. Northwestern University – an “excessive fee” case – filed a Writ of Certiorari, asking the Court to review a Seventh Circuit decision affirming a district court’s grant of defendants’ motion to dismiss.

2020 lessons learned – lump sum de-risking in the context of steeply declining interest rates

Defined benefit plan valuation interest rates have declined nearly 200 basis points since late 2018. Interest rate stabilization has significantly mitigated the effect of this decline on plan funding. GAAP accounting (e.g., balance sheet disclosure) is, however, indexed to current rates, and the steep declines in interest rates have presented a number of challenges and opportunities for defined benefit plan sponsors.

2021 Increases for Retirement Plans, Social Security

The Social Security Administration just announced benefit increases effective in 2021. Current retirees will receive a cost-of-living increase, beginning in January 2021, of 1.3%, reflecting the increase in CPI-W between the 3rd quarter of 2019 and the 3rd quarter of 2020.