House GOP Outlines Pieces of Retirement Security Agenda
Last week, House Republicans released the first of six documents detailing their policy agenda, a portion of which included recommendations to “build retirement security through the private retirement system.”
The most notable aspect of the report
, however — a blueprint from the Task Force on Poverty, Opportunity, & Upward Mobility — is what it did not say, since there was zero discussion of the retirement savings tax incentives that underpin success of the system. Any tax policy recommendations will presumably be left to a future report currently being crafted by the Task Force on Tax Reform. The highly anticipated tax reform report is likely to be released before the political conventions in mid-July.
Instead, the poverty report contained five general retirement policy recommendations that revealed Republican lawmakers’ concerns about the funding of both single and multi-employer defined benefit plans and the federal agency that guarantees those benefits, the Department of Labor’s (DOL) fiduciary rule, and other regulatory impediments to the adoption and maintenance of employer-provided retirement plans.DB Plan and PBGC Funding
The report took a dim view of the funding of DB plans in general, and the Pension Benefit Guaranty Corporation (PBGC) in particular, which suggests skepticism within the House Republican caucus about the viability of private DB arrangements. The report alluded to the relaxation of pension plan funding rules for certain DB plans since the enactment of the Pension Plan Protection Act of 2006 to raise revenue for unrelated spending and recommended that those sorts of revenue gimmicks should not be considered going forward.
Despite multiple pieces of legislation increasing premiums over the last five years, the report noted that the PBGC remains “badly underfunded,” arguing that the “PBGC’s financial crisis poses a grave risk to taxpayers and undermines the retirement security of all workers and retirees enrolled in defined benefit plans.” So the report recommends that, “Congress should set premium levels that reflect PBGC’s financial needs, protecting retirees and finally ending the threat of a taxpayer bailout.” This recommendation suggests that future increases in both single and multi-employer PBGC premiums remain on the table.Multiple Employer Plans (MEPs)
The report recommended that Congress “make it easier for employers to band together to offer 401(k)s,” arguing that “these shared plans reduce administration and compliance costs.” The concept of opening up multiple employer plans (MEPs) to unrelated private businesses is a bipartisan one, since a detailed MEP proposal was also contained in President Obama’s latest budget request. Facilitating the use of these so-called “open” MEPs is one thing that seems to have the best chance to get done in the retirement policy space by the end of the Obama administration. Reduce Federal Regulations
The report predictably slammed the DOL’s new fiduciary rule arguing that the new rules will “create barriers to retirement security.” The report also called for providing “information about retirement benefits electronically rather than in hardcopy.”Andrew Remo is the American Retirement Association’s Director of Congressional Affairs.