The leaders of the House Ways and Means committee have introduced a bipartisan bill that includes a pension recoupment provision which represents three years of effort by the National Retiree Legislative Network.
Ways and Means Committee Chairman Richard E. Neal (MA-01) and Ranking Member Kevin Brady (TX- 08) have introduced the Securing a Strong Retirement Act of 2020. Included in the bill is Section 301 which is the direct result of the NRLN’s work to protect retirees’ pension benefits. The legislative language states:
Section 301, Recovery of retirement plan overpayments. Sometimes retirees mistakenly receive more money than they are owed under their retirement plans. These mistakes cause problems when they occur over time, and plan fiduciaries later seek to recover the overpayments from unsuspecting retirees. When an overpayment has lasted for years, plans often compel retirees to repay the amount of the overpayment, plus interest, which can be substantial. Even small overpayment amounts can create a hardship for a retiree living on a fixed income. The legislation would allow retirement plan fiduciaries the latitude to decide not to recoup overpayments that were mistakenly made to retirees. If plan fiduciaries choose to recoup overpayments, limitations and protections apply to safeguard innocent retirees. This protects both the benefits of future retirees and the benefits of current retirees. In addition, rollovers of the overpayments would remain valid, which is another important protection for participants.
It is uncertain whether the Securing a Strong Retirement Act of 2020 bill will be passed in the House during the final weeks of the 116th Congress. If not, the NRLN expects that Chairman Neal and Ranking Member Brady will re-introduce the bill in the 117th Congress which begins January 3, 2021.
Gaining the pension recoupment provision in the bill is a “case study” of the NRLN’s work that took place. The effort began on September 10 -12, 2018 when leaders of the NRLN, retiree associations and chapters had 50 appointments in offices of Senators and Representatives on Capitol Hill as part of the NRLN’s fly-in to Washington, DC. One of the issues advocated in those meetings was the NRLN’s proposal to protect pension recipients when pension plan sponsors find a calculation error and force retirees to pay back thousands of dollars and suffer a large cut in benefits as well. (It was advocated again at fly-ins on February 25 – 27, 2019 and February 24 – 26, 2020.)
Most of the time in Washington, DC, a partnership with other groups is required to get legislation introduced, or at least communication with other groups to gain their assurance they will not oppose what you are advocating. The NRLN worked both sides.
There were months and months of negotiations and compromises with retirement and employer groups. The NRLN moved away from its initial position of very small fiduciary adjustments to pension plan actuarial calculations to avoid pension recoupment to the language that is now in the bill which is also a strong protection for retirees.
Through dozens of meetings and phone calls Alyson Parker, NRLN Executive Director, Jay Kuhnie, President, National Chrysler Retirement Organization and NRLN Board Member, and I never gave up hope that our efforts would eventually result in pension recoupment language in a bill. Jay was deeply committed to the effort because a number of NCRO members had suffered pension recoupment and paid back thousands of dollars to the Chrysler/Fiat pension plan.
I should note there are other provisions in the Securing a Strong Retirement Act of 2020 that are similar to the proposals in the NRLN’s Whitepaper on Universal Retirement Accounts to enhance retirement security that was widely circulated on Capitol Hill and advocated at a fly-in. For example:
- Promote savings earlier for retirement by enrolling employees automatically in their company’s 401(k) plan, when a new plan is created;
- Create a new financial incentive for small businesses to offer retirement plans;
- Increase and modernize the existing federal tax credit for contributions to a retirement plan or IRA (the Saver’s Credit).