PLANADVISER - September/October 2019 - 15

Scalia
Named
Labor
Secretary
His record promises a
conservative agenda
THE Republican-led U.S. Senate approved
President Donald J. Trump's nomination
of Eugene Scalia, son of late
Supreme Court Justice Antonin Scalia
and a former Department of Labor
(DOL) solicitor general, to the role of
Labor secretary, in late September.
Having served in the high-ranking
DOL position under the George W. Bush
administration, Scalia will
likely hit
the ground running with a markedly
conservative agenda, experts suggest.
According
to
Brian Netter,
a
partner in the Washington office of
Mayer Brown's litigation and dispute
resolution practice, Scalia is known
for having worked in the trenches of
numerous labor issues for many years.
When Scalia was nominated, he
was engaged in what experts say was
a very successful litigation practice,
following his first position at the DOL.
Netter says the DOL's position
on promulgating new regulations to
address industry conflict of interests
will likely remain murky. And, given
Scalia's recent litigation experience
representing clients opposed to stricter
conflict standards, he would likely
be called on to recuse himself from
working on fiduciary issues under the
Employee Retirement Income Security
Act (ERISA).
" He would, therefore, bring to the
post a significant level of personal
understanding of how to enact President
Trump's deregulatory agenda, "
Netter says, adding that he thought
Scalia could potentially have a big
influence on the retirement planning
marketplace. -John Manganaro
TALKING POINTS
Loan Limit Countdown
With changes made under the 2018
Bipartisan Budget Act, sponsors may still
set limits on plan loans and hardship
withdrawals until December 31, 2020.
Source: IRS
Increased Wage Moments
Three-quarters of 1,000 employees who
make under $60,000 a year said, if their
employer offered savings options when it
gave a raise, they'd be less stressed and
more confident about their finances.
Source: Commonwealth, " Rise With the Raise: The promise of straightforward employer benefits
for building lower-wage employee financial security "
planadviser.com September-October 2019 | 15
DIAs as a 401(k) Default
All account savings can be income streams
VERY few defined contribution (DC)
retirement plans in the U.S. today pay
out lifetime income streams-a scarcity
that leaves many retirees at the
risk of running out of money.
Researchers from the Brookings
Institute have suggested a partial solution
to this problem. They recommend
that an employer include deferred
lifetime income annuities (DIAs) as a
default in its company-provided 401(k)
plan. They conclude that defaulting a
portion of employees' portfolios into a
DIA " is a practical and attractive way
for plan sponsors to provide a lifetime
income for workers in defined contribution
accounts. "
To annuitize 10% of a participant's
assets
should
reduce
his
concern
about lacking liquidity in old age. The
researchers suggest persuading DC
plan sponsors to describe all benefit
amounts in their 401(k) plan as
monthly or annual income streams.
This will emphasize the role of the DIA
in helping retirees meet consumption
needs, rather than as a " loss " of access
to a portion of their account balance.
" It is also likely that retirees whose
consumption needs are covered by a
relatively secure income stream from
Social Security paired with their DIA
benefits would be willing to take more
investment risk with their liquid 401(k)
or IRA [individual retirement account]
assets, " the report says. " In this way,
the DIA could help enhance retirement
security, enabling households
to benefit from the equity premium
later in life. This could be a particularly
important strategy in light of the
permanently lower interest rates that
many financial economists expect in
the future. " -Rebecca Moore

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PLANADVISER - September/October 2019

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