[vc_row][vc_column width=”2/3″ el_class=”section section1″][vc_column_text]For many, 2019 is going to be a year of change – this extends to retirement savings options and various other retirement plans. The battle for the protection of investors will rage on, and Congress will continue their discussions to avoid heavy cuts in pension benefits. With so much to look for, we’ve broken down four of the most important retirement policy topics to watch closely in 2019!
Savings Plans
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Starting in 2019, California’s plan is expected to reach over seven million workers. Elsewhere, Illinois will start in 2019 while others are in the planning phase (including Connecticut, Vermont, and Maryland).
Investor Protection
Who’s looking out for the interest of investors? Well, this has been an ongoing battle and the SEC want to introduce a ‘regulation best interest’ standard whereby brokers look after the financial interests of their clients (rather than their own interests). Additionally, this standard would alert clients to all conflicts of interest.
So far, the term ‘best interest’ has been a cause for much debate. According to an AARP representative, disclosure forms need to be simplified, and investors need to be provided with the most important information pertaining to financial decisions. How to achieve this is something potentially to be discovered this year.
Saving Pensions
In recent times, there’s been a risk to over one million pension benefits as an insolvency crisis is averted by a special congressional committee. Known as ‘multiemployer pension plans,’ certain plans covering 1.3 million retirees/workers are currently underfunded. Thanks to financial crises in 2001 and 2008, it’s thought the underfunding has reached nearly $50 billion.
Seen as the federally-sponsored insurance backstop when plans are defunct, the Pension Benefit Guaranty Corp predicts no funds after 2025 for their own multiemployer program. While the Multiemployer Pension Reform Act was agreed back in 2014, it was soon opposed by consumer groups and retiree organizations.
What’s the solution? The special committee missed the deadline for replacement legislation in November, but a draft proposal has been suggested. Rather than cutting benefits, the proposal would use existing taxpayers and pension plans to raise money. This year, there’s still plenty to discuss in order to save the plans and protect both retirees and workers.
Social Security Expansion
Finally, the newly-formed House is expected to hear plans for a Social Security overhaul this year. Now controlled by the Democrats, the majority of winning candidates support the expansion of benefits. In addition to this, Rep. John Larson created an expansion legislation which has amassed 200 co-sponsors – Larson now chairs the Ways and Means Social Security Subcommittee.
Expected to get a hearing and even reach the House, the bill suggests a 2% boost to all benefits, a larger maximum benefit for low-income workers, and a larger cost-of-living adjustment. How will this be financed? The taxation cap on wages would be lifted, and a higher payroll tax rate would also be introduced.
Summary
From these four issues, it’s easy to see that 2019 is going to be a big year for both US workers and retirees in the private and public sectors.[/vc_column_text][/vc_column][vc_column width=”1/3″][vc_single_image image=”35790″ img_size=”292×285″ style=”vc_box_shadow”][/vc_column][/vc_row]