“As the year unfolds, the president will pick a signature issue … such as the auto [IRAs], while Congress will drive a range of issues, such as 401(k) fee disclosure and scrutiny of plan investments,” said James M. Delaplane Jr., a partner at Davis & Harman in Washington.
Delaplane hosted a presentation, “Retirement Policy Update: What the Financial Crisis and the New Administration and Congress Mean for America’s Retirement System,” on Tuesday, March 31, at Investment News’ third annual Retirement Income Summit in New York.
“The administration really cares about this auto IRA, and there are conversations between the White House and Capitol Hill about making this an early win for the Obama administration. The odds of it happening are way, way up,” Delaplane said.
Amid the crisis and depleted retirement accounts, there is suddenly a new focus on the shift of risk to participants, resulting in heightened attention to investment issues and the extent of equity exposure, he said.
Delaplane anticipates greater legislative and regulatory attention on investment oversight, with particular scrutiny on target-date funds.
The equity exposure varied wildly in funds with a target of 2010. Some had equity exposure as low as 8 percent, while others were as high as 62 percent.
“One 2010 fund was down 40 percent, and this is for someone on the doorstep of retirement,” Delaplane said. “Those statistics get lawmakers fired up.”
As for the investment advice provision in the Pension Protection Act of 2006, Delaplane said he expects that Obama will tighten regulations.
“Think about where you were pre-PPA and the constraints you had in that environment. We could be going back to pre-PPA,” Delaplane said.
“The crisis has changed the environment, raised the odds for reform on big issues and increased voter retirement anxiety, but it also opens discussion on fundamental reforms and changes the retirement policy priority list.”