Friday, January 27, 2023

US budget will help retirees and financial sector

WASHINGTON ( Associated Press) – Part of a $1.7 trillion US budget bill passed Friday is billed as a dramatic step to bolster the retirement accounts of millions of working Americans, but the real benefits may go to a more secure group: Financial Services Industry.

The retirement savings initiative – dubbed Secure 2.0 – will redefine the way people enroll in retirement plans, from requiring them to join plans to asking them to opt out. The objective of the provision is to ensure maximum participation of the people.

It allows workers to use their student loan payments as a substitute for their contributions to their retirement plans – meaning they will be able to receive retirement matching contributions from their employers to pay off that loan – Increases the age for required distribution plans and expands a tax-deductible savers credit.

But as is the case with many high-profile budget bills that barely receive public consideration, the law’s provisions also benefit corporate interests with a strong financial interest in its consequences.

“Some of these provisions are nice and we want to help people who want to save, but this is a huge boon to the financial services industry,” said Monique Morrissey, an economist at the Progressive Economic Policy Institute in Washington. He said parts of the bill were “disguised as savings incentives”.

Daniel Halperin, a Harvard law professor who specializes in tax policy and retirement savings, said one of the most obvious benefits for the industry is a provision that gradually raises the age for mandatory distributions from 72 to 75. .

“The goal is to leave that money out there for as long as possible,” to collect administrative fees, he said. “For people who have saved between $5, 7 and $10 million, companies continue to charge. It’s crazy to leave them there.”

Companies such as BlackRock Funds Services Group, Prudential Financial, Pacific Life Insurance, and corporate lobby groups such as Business Roundtable and the American Council of Life Insurers are just some of the organizations that lobbied lawmakers to pass the Secure 2.0 initiative, the disclosures show. . Senate.

Nation World News Desk
Nation World News Desk
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