Benefits Trends Ahead: What HR Professionals Should Watch For In 2020
The changing political landscape could bring large changes to our industry; here’s how to prepare
Posted on 09-24-2019, Read Time: Min
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The benefits landscape is ever-changing. It is a challenge for human resources professionals and benefits fund administrators alike to navigate the moving goal-posts of our industry as policies and requirements - such as individual mandates, new required minimum distributions and taxes on student loan benefits - change. From a legislative perspective, HR professionals and administrators can expect changes that drastically affect the benefits industry over the next year, each bringing their own changes our industry should watch.
Retirement Plans Committee of IBM v Jander
This term, the court will decide if IBM can use the does "more harm than good" allegation decided by a unanimous court back in Fifth Third Bancorp v. Dudenhoeffer (2014). Specifically, the court will determine Fifth Third’s “more harm than good” pleading standard can be satisfied by generalized allegations that the harm of inevitable disclosure of an alleged fraud generally increases over time.
Intel Corp. Investment Policy Committee v. Sulyma
This case will determine whether the three-year statute of limitations under the Employee Retirement Income Security Act (ERISA), which starts “the earliest date on which the plaintiff had actual knowledge of the breach or violation,” grants the participant the right to sue if relevant information was disclosed to the plaintiff by the defendants more than three years before the plaintiff filed the complaint.
Human resources professionals and plan benefit administrators should closely watch both of these cases, because they will set precedence for retirement and pension fund managers in the industry. Each of these cases addresses the rights of employees to challenge mismanagement of retirement and pension funds, and the decisions will have lasting effects on how our industry does business.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act has passed the House Ways and Means Committee and is waiting on a scheduled vote on the House floor. Some of the most notable provisions include:
• Repealing the maximum age for traditional IRA contributions, allowing for individuals over 70 ½ to continue contributing to IRAs. The bill will also increase in age for required the beginning date for mandatory distributions to 72.
• Increasing the tax credit for small employer pension plan start-up costs, making it more affordable for small businesses to offer retirement plans.
• Automatic enrollment credit for small businesses for employers to offset start-up costs for new 401(k) plans and SIMPLE IRA plans that include automatic enrollment.
The Senate counterpart of the SECURE Act is RESA, the Retirement Enhancement and Savings Act, which was reintroduced in March and also awaits a vote. The most notable provisions in RESA include:
• As in the SECURE Act, automatic enrollment credit for small businesses for employers to offset start-up costs for new 401(k) plans and SIMPLE IRA plans that include automatic enrollment.
• A unique component that would allow small businesses to band together and create open multiple employer plans (MEPs), rather than offering a plan alone or requiring a ‘common bond’ between employers as under current law.
• Healthcare. Many candidates are discussing Medicare for all, a system that union members are concerned about. A large benefit of union membership is the health care negotiated by unions with employers, and plans tend to be very good. And while some unions support the single-payer legislation put forth by Senator Bernie Sanders (I-VT), others are not so enthusiastic. Medicare for All moves every single person from private, even employer-sponsored, health insurance and over to a single-payer system. Many union members enjoy their employer-sponsored insurance.
• Student Loan Debt. Additionally, some candidates are discussing canceling student loan debt. While this may or may not become a reality, it changes how employers are recruiting new talent and the retention of existing talent. Employers who offer student loan repayment as a benefit may need to alter their plans to appeal to younger generations with mounting student debt.
Senator Elizabeth Warren (D-MA) has specifics outlined in her campaign to cancel student debt. The Student Loan Debt Relief Act would cancel or reduce student loan debt for millions of Americans. Under her plan, over 95 percent would have their debt significantly reduced and almost 75 percent would have their loans forgiven entirely. Families making under $100,000 would have $50,000 in student loans forgiven, followed by phase-outs for higher earners, canceling $1 of debt for every $3 earned.
Senator Bernie Sanders (I-VT) has proposed a plan to forgive all federal student loans, regardless of income, including parent loans for their child’s college education.
The changing political landscape in Washington has always filled the benefits industry with uncertainty, but there are steps you can do to prepare.
• Work with a benefits administrator. The administrators and staff at Benefit Programs Administration (BPA) work around the clock to track and understand the latest in benefits and employment policies.
• Subscribe to legislative updates from the U.S. Department of Labor and your state department of labor (or its equivalent).
• Subscribe to the Society for Human Resource Management legislative updates.
• Hold information sessions with employees to hear concerns and answer questions about upcoming policies that could affect your workforce.
• Keep information on all new or incoming policy changes in a system like a shared drive or online company portal for employees to access at all times.
Supreme Court Rulings
In October, the Supreme Court will begin hearing cases for the 2019 term. This term, the justices will hear two pension-related cases. Their decisions could have a big impact on the benefits industry, leading to a change in precedent and policy on how the benefits industry administers pension and benefits plans.Retirement Plans Committee of IBM v Jander
This term, the court will decide if IBM can use the does "more harm than good" allegation decided by a unanimous court back in Fifth Third Bancorp v. Dudenhoeffer (2014). Specifically, the court will determine Fifth Third’s “more harm than good” pleading standard can be satisfied by generalized allegations that the harm of inevitable disclosure of an alleged fraud generally increases over time.
Intel Corp. Investment Policy Committee v. Sulyma
This case will determine whether the three-year statute of limitations under the Employee Retirement Income Security Act (ERISA), which starts “the earliest date on which the plaintiff had actual knowledge of the breach or violation,” grants the participant the right to sue if relevant information was disclosed to the plaintiff by the defendants more than three years before the plaintiff filed the complaint.
Human resources professionals and plan benefit administrators should closely watch both of these cases, because they will set precedence for retirement and pension fund managers in the industry. Each of these cases addresses the rights of employees to challenge mismanagement of retirement and pension funds, and the decisions will have lasting effects on how our industry does business.
Congressional Developments
Congress also has a great deal of power over policies that affect the benefits industry.The Setting Every Community Up for Retirement Enhancement (SECURE) Act has passed the House Ways and Means Committee and is waiting on a scheduled vote on the House floor. Some of the most notable provisions include:
• Repealing the maximum age for traditional IRA contributions, allowing for individuals over 70 ½ to continue contributing to IRAs. The bill will also increase in age for required the beginning date for mandatory distributions to 72.
• Increasing the tax credit for small employer pension plan start-up costs, making it more affordable for small businesses to offer retirement plans.
• Automatic enrollment credit for small businesses for employers to offset start-up costs for new 401(k) plans and SIMPLE IRA plans that include automatic enrollment.
The Senate counterpart of the SECURE Act is RESA, the Retirement Enhancement and Savings Act, which was reintroduced in March and also awaits a vote. The most notable provisions in RESA include:
• As in the SECURE Act, automatic enrollment credit for small businesses for employers to offset start-up costs for new 401(k) plans and SIMPLE IRA plans that include automatic enrollment.
• A unique component that would allow small businesses to band together and create open multiple employer plans (MEPs), rather than offering a plan alone or requiring a ‘common bond’ between employers as under current law.
2020 Presidential Race
Finally, the 2020 presidential race is heating up and candidates have their own ideas on how to protect retirement in America, address the student loan crisis and how to reform the healthcare system.• Healthcare. Many candidates are discussing Medicare for all, a system that union members are concerned about. A large benefit of union membership is the health care negotiated by unions with employers, and plans tend to be very good. And while some unions support the single-payer legislation put forth by Senator Bernie Sanders (I-VT), others are not so enthusiastic. Medicare for All moves every single person from private, even employer-sponsored, health insurance and over to a single-payer system. Many union members enjoy their employer-sponsored insurance.
• Student Loan Debt. Additionally, some candidates are discussing canceling student loan debt. While this may or may not become a reality, it changes how employers are recruiting new talent and the retention of existing talent. Employers who offer student loan repayment as a benefit may need to alter their plans to appeal to younger generations with mounting student debt.
Senator Elizabeth Warren (D-MA) has specifics outlined in her campaign to cancel student debt. The Student Loan Debt Relief Act would cancel or reduce student loan debt for millions of Americans. Under her plan, over 95 percent would have their debt significantly reduced and almost 75 percent would have their loans forgiven entirely. Families making under $100,000 would have $50,000 in student loans forgiven, followed by phase-outs for higher earners, canceling $1 of debt for every $3 earned.
Senator Bernie Sanders (I-VT) has proposed a plan to forgive all federal student loans, regardless of income, including parent loans for their child’s college education.
The changing political landscape in Washington has always filled the benefits industry with uncertainty, but there are steps you can do to prepare.
• Work with a benefits administrator. The administrators and staff at Benefit Programs Administration (BPA) work around the clock to track and understand the latest in benefits and employment policies.
• Subscribe to legislative updates from the U.S. Department of Labor and your state department of labor (or its equivalent).
• Subscribe to the Society for Human Resource Management legislative updates.
• Hold information sessions with employees to hear concerns and answer questions about upcoming policies that could affect your workforce.
• Keep information on all new or incoming policy changes in a system like a shared drive or online company portal for employees to access at all times.
Author Bio
| Zane Dalal is Executive Vice President of Benefit Programs Administration. In his role, Zane is responsible for implementing and overseeing companywide operations. Since 1991, Zane has been involved in all departments within BPA providing him the perspective and knowledge needed to ensure the company is continuously evolving and succeeding on all fronts. Zane has a heavy focus on legal issues, technology applications and company strategy. Connect Zane Dalal Visit www.bpabenefits.com |
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