Senate Finance Takes on Retirement Concerns
The Senate Finance Committee held a hearing Jan. 28
on “Helping Americans Prepare for Retirement: Increasing Access, Participation and Coverage in Retirement Savings Plans.”
Chairman Orrin Hatch (R-Utah) noted in his opening remarks
that the hearing would allow the full committee to hear more about the legislative proposals considered by the committee’s Savings and Investment Working Group. These proposals included multiple employer plans with no other nexus required of employers (“open MEPs”), increased tax credits for small business owners who set up a retirement plan, permitting long-term part-time employees to contribute to 401(k) plans, and improving the Saver’s Credit.
Hatch singled out bipartisan proposals for open MEPS, calling them “an idea whose time has come,” and spoke of the need to remove obstacles to employers’ offering of annuities through retirement savings programs. He also acknowledged the concerns committee members have about multiemployer plans (not to be confused with multiple employer plans, or MEPs, noted above), and indicated he hoped to convene a hearing on these plans in the next work period.
Ranking Member Ron Wyden (D-Ore.) praised the new Oregon state retirement savings program
, calling it a “sea change” for retirement savings. However, he raised concerns about portability and lifetime income availability in the current system, announced he was introducing a bill to provide for a strengthened Saver’s Credit, and indicated that he and Hatch are working on an open MEP proposal with Sens. Sherrod Brown (D-Ohio) and Nelson (D-Fla.).
At the end of his remarks, Wyden expressed concerns about multiemployer plans (again, not to be confused with multiple employer plans, or MEPs), criticizing the legislation passed in 2014 that permits a reduction in benefits, and calling on the committee to help the mine workers’ pension plan. These concerns were later echoed by Sens. Brown, Mark Warner (D-Va.) and Robert Casey (D-Penn.).
Testimony was offered by Dr. Alicia Munnell from the Boston College Center for Retirement Research, James Kalamarides from Prudential and Tom Barthold with the Joint Committee on Taxation. Munnell voiced support for the Working Group’s proposals, but indicated even bolder actions are required to make significant progress. Her recommended “bold actions” are requiring all 401(k) plans to automatically enroll participants at an increased initial rate, with auto-escalation up to at least 12% of pay, and a federal auto-IRA program. Kalamarides expressed support for open MEPs, touting them as a solution for portability concerns, as well as a road to increased small business plan formation. Barthold provided background information on retirement programs.
There appeared to be a high level of interest in the hearing topic by Finance Committee members; eight Republican and six Democrat members came to the hearing. Sen. Thune (R-S.Dak.) commented that he hoped the committee will find time to take action on the Working Group’s report. We do, too.
Judy Miller is the Director of Regulatory Affairs at the American Retirement Association.