A part of the bill budget from USA of 1.7 trillion dollars, approved on Friday, has been presented as a spectacular step to strengthen the accounts of retirement of millions of American workers, but the real gain may go to a much safer group: the financial services industry.
The savings initiative for retirement —so-called Secure 2.0— realign the way people enroll in health plans retirement, by going from requiring them to take advantage of the plans to asking them to unsubscribe if they do not want them. The provision is intended to ensure greater participation of people.
It also allows workers to use their paychecks student loans as a substitute for your contributions to your benefit plans retirement —meaning they will be able to get matching retirement contributions from their employers to pay off that debt—, raises the age for required distributions from plans, and extends a tax-deductible saver’s credit.
But as with many high-profile budget bills that barely receive public consideration, the provisions of the legislation also benefit corporate interests with a strong financial interest in its results.
“Some of these provisions are good, and we want to help people who want to save, but this brings a lot of help to the financial services industry,” said Monique Morrissey, an economist at the progressive Economic Policy Institute in Washington. Some parts of the bill, she added, are “disguised as savings incentives.”
Daniel Halperin, a law professor at Harvard who specializes in fiscal policy and savings for the retirementstated that one of the clearest benefits for the sector is a provision that gradually increases the age for mandatory distributions, from 72 to 75 years.
“The goal is to leave that money there for as long as possible,” in order to collect administrative fees, he added. “For people who have saved between 5, 7 and 10 million dollars, the companies continue to charge fees. It’s crazy to let them leave it there.”
Companies like BlackRock Funds Services Group, Prudential Financial, Pacific Life Insurance and corporate lobby groups such as Business Roundtable y American Council of Life Insurers are just some of the entities that lobbied lawmakers to pass the Secure 2.0 initiative, Senate lobbying disclosures show.