September 29, 2022

What They’re Saying | Support for Toomey, Scott, Meijer’s Retirement Savings Modernization Act

Washington, D.C. – Earlier today, U.S. Senators Pat Toomey (R-Pa.) and Tim Scott (R-S.C.) and U.S. Representative Peter Meijer (MI-03) introduced the Retirement Savings Modernization Act to bolster Americans’ retirement savings by allowing workers in defined contribution plans, like 401(k)s, to better diversify their portfolios and invest in higher returning asset classes.

To read the full text of the bill, click here.

For a one page summary of the bill, click here.

The Retirement Savings Modernization Act has broad industry support, including from the Chartered Financial Analyst (CFA) Institute, the Small Business Investor Alliance (SBIA), the Defined Contribution Alternatives Association (DCALTA), the Institute for Portfolio Alternatives (IPA), and the American Securities Association (ASA), and the Securities Industry and Financial Markets Association (SIFMA).

CFA Institute

“CFA Institute supports the expansion of investment options permitted to be offered by retirement plan sponsors to a growing base of retirements savers that have been closed out of participating in various asset classes that potentially offer higher, risk adjusted returns in the alternative asset categories, including private equity. This Section would give defined contribution plan savers, including 401(k) savers, access to the same asset classes that are already included and utilized extensively in all professionally managed defined benefit plans. It is important to note that in the context of defined contribution plans, the inclusion of alternative asset class options must be carefully scrutinized by the plan sponsor and their advisors to ensure the products and funds being offered to the plan participant are well established, professionally managed, have reasonable fee structures and are appropriately diversified.”

Small Business Investor Alliance (SBIA)

“This pragmatic proposal maintains all investor protections and fiduciary duties while clarifying that that alternative asset classes are available to help maximize returns that plan participants rely on to fund their retirements. Better returns and broader diversification should be an option for working Americans preparing for their retirement,” noted SBIA president Brett Palmer.

Click here to read SBIA’s full statement. 

Defined Contribution Alternatives Association (DCALTA) and the Institute for Portfolio Alternatives (IPA)

“We… support the Retirement Savings Modernization Act (the Act), legislation that would vitally enhance the retirement security of U.S. defined contribution (DC) plan savers.”

“Over the last 15 years, the equity value of U.S. private equity-backed companies has grown 2.5x faster than public company values. DC plan savers limited to publicly traded assets may face an ever-shrinking set of investment options and be confronted with concentration risks, likely diminishing long term returns.”

“Adding a modest allocation to alternative assets with a multi-asset fund, such as a target date fund, can materially enhance the retirement security of a DC plan saver by increasing annual income by 17%. Participants would not only benefit from better investment performance, but they would also face lower volatility. Perhaps most importantly, these savers could reduce the risk of outliving their assets by almost half.”

Read DCALTA and IPA’s full letter of support here.

American Securities Association (ASA)

“We support Senators Toomey and Scott's bill to expand the choice retirement savers have to invest in a broader, more diverse set of asset classes,” ASA CEO Chris Iacovella said.

Read ASA’s full statement of support here.