Pension Funding Legislation Introduced
On Thursday, Chairmen Bobby Scott and Richard Neal introduced separate (but similar) legislation in their respective Committees to address multiemployer pension reform and single employer funding relief. The bills include the funding provisions that were previously included in the House-passed HEROES Act. The intention is for these provisions to be included in the upcoming budget reconciliation process. ERIC sent letters to both Chairman Scott and Chairman Neal thanking them for the legislation and making these issues a priority.
ERIC supports the single employer provisions included in both bills. ERIC has continually urged Congress to move forward on multiemployer pension reform but has not endorsed specific legislation. Even with the introduction of this legislation, there are still on-going negotiations in the Senate over multiemployer pension reform. As we have previously shared, the multiemployer and single-employer issues are tied together and one is unlikely to move without the other. As such, we are continuing to urge the Senate to move forward on their negotiations. If you have feedback on the multiemployer provisions in the legislation, please let me know.
Text of the legislation can be found here and here.
A summary of the legislation can be found here.
ESG Rule
One of the first acts of the Biden Administration was to release a list of agency actions for review relating to the Executive Order “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.” This list includes the “Financial Factors in Selecting Plan Investments” final rule.
The final rule took effect on January 12, requiring retirement investments to be based on pecuniary factors. Since this rule is effective, the Administration would have to publish a new rule for notice and comment to undo it. However, the Administration could issue subregulatory guidance, such as FAQs, to supplement the ruling. We are working with other trade associations on possible issues to include – such as the use of ESG in the preamble and guidance around proprietary products – and will be reaching out shortly for your feedback.
IRS Notice 2020-86
Last week, the IRS issued guidance on Sections 102 and 103 of the SECURE Act regarding safe harbor plans. The notice clarifies that:
- The new 15 percent cap for qualified automatic contribution arrangements (QACAS) is not a required change that must be adopted by plan sponsors
- The advance safe-harbor notice is eliminated only for plans that are QACAs or that intend to rely on the non-elective contribution safe-harbor to satisfy only the ADP Test
- The retroactive amendment rules could be used to add a new safe-harbor retroactively, but also to reinstate a safe-harbor
We appreciate the IRS for issuing this guidance and look forward to working with Treasury on additional guidance under the SECURE Act.