Press Release

FOR IMMEDIATE RELEASE

CONTACT:
Contact: Phyllis Surrett
703.516.9300
psurrett@asppa.org

ASPPA Supports the Next Generation of Retirement Policy

October 24, 2006 (Arlington, VA) – Even with the passage of the Pension Protection Act of 2006 (PPA), Congress is already considering the next generation of retirement policy, according to the American Society of Pension Professionals & Actuaries (ASPPA) incoming President, Chris Stroud, MSPA, incoming ASPPA President-elect, Sal Tripodi, APM, and ASPPA’s Executive Director/CEO, Brian Graff, APM.

Among the issues likely to be addressed in the 110th Congress is a major retirement savings proposal that establishes a mandatory payroll-deduction IRA program. Several bills containing this proposal were introduced in 2006, such as the Women’s Retirement Security Act of 2006 (S. 3951). Introduced by Senators Gordon Smith (R-OR), Kent Conrad (D-ND) and John Kerry (D-MA), S. 3951 contains a number of small business provisions designed to increase retirement savings for millions of American workers. A previous bill, the Savings Competitiveness Act of 2006 (S. 2431), introduced by Senator Max Baucus (D-MT), also contains this provision. According to Stroud, Tripodi and Graff, this proposal is expected to be reintroduced in the 110th Congress in 2007.

The employer-sponsored retirement plan system is often criticized for its lack of coverage. Depending on what data you look at, between 40-50 percent of the nation’s workforce are not offered a qualified retirement plan by their employer. The mandatory payroll-deduction IRA program will provide a venue for these Americans to save for retirement.

There are two key components to the mandatory payroll-deduction IRA proposal. The first is most employers that do not currently offer a qualified retirement plan would be required to offer their workers the opportunity to save from their pay for retirement through a payroll-deduction IRA. Employees who are at least age 18 and have worked at least three months would be eligible for the program. Importantly, there would be no requirement for employers to make a contribution to the program.

Another key component of the proposal is a major expansion of the SAVER’s credit. Both components would expand the number of employees eligible for the credit. Further, the Baucus proposal would transform the credit into a government match by requiring that the SAVER’s credit be deposited directly into the employee’s IRA or, if his or her employer permits, the employee’s account in an employer-sponsored retirement savings plan.

ASPPA supports giving American workers access to an employer-based retirement savings program where they are not already eligible for a qualified retirement plan. ASPPA believes it is critically important that employers, particularly small businesses, not have to maintain two separate retirement savings programs.

According to Stroud, Tripodi and Graff, this legislative proposal, coupled with an expanded SAVER’s credit, should eventually encourage employers, particularly small businesses, to offer a qualified retirement plan to their workers. The proposal also greatly improves the retirement savings rates of lower-income workers (statistics clearly show that low- to moderate-income workers are significantly more likely to save for retirement when allowed to save at the workplace).

ASPPA, a national organization made up of more than 6,000 retirement plan professionals, is dedicated to the preservation and enhancement of the employer-sponsored retirement plan system. ASPPA is the only organization comprised exclusively of pension professionals that actively advocates for legislative and regulatory changes to expand and improve the employer-sponsored pension system. In addition, ASPPA offers an extensive credentialing program with a reputation for high-quality training that is thorough and specialized. ASPPA credentials are bestowed upon administrators, consultants, actuaries and other professionals associated with the retirement plan industry.