The Insured Retirement Institute is throwing its weight behind legislation that would require all but the smallest employers to sponsor 401(k) plans. The Automatic Retirement Plan Act of 2017, sponsored by Rep. Richard Neal, D-MA, would provide a “purely private sector solution” to the access gap in workplace retirement plans, said Lee Covington, senior vice president and general counsel at IRI, in a press call.

Rep. Neal's bill requires all private sector employers with more than 10 employees to offer a defined contribution retirement plan. Covington said the mandate is prescribed “in a way to make it painless for small business owners.”

IRI's support for the bill is laid out in the organization's 2018 Retirement Security Blueprint, released Wednesday. Previous Blueprints from IRI, whose membership includes insurers, broker-dealers, and asset managers, have supported legislation advanced by Rep. Neal and others that would mandate enrollment in IRAs for workers without access to a retirement plan.

“We know there is some interest with Republican members,” Covington said of the Automatic Retirement Plan Act.

Data varies on the extent of access and participation rates in workplace plans. About 66 percent of non-union, private sector workers have access to a workplace retirement savings plan, according to the Labor Department. Only 50 percent of the private sector workforce actually participates in retirement plans.

Data from Pew Charitable Trusts shows that 52 percent of adult workers do not participate in a workplace plan; 68 percent of millennials are without access to a retirement plan. Pew draws its data from the 2012 Census Bureau survey, which some economists have shown under-reports access to retirement plans.

Nevertheless, tens of millions of Americans lack access to retirement plans through their employers. The Automatic Retirement Act would “assure most Americans have access to a 401(k) plan,” said Covington.

Congressional Support for Retirement Legislation at an All-Time High

The 2018 Blueprint lays out a host of policies to address retirement savings shortfalls.

“We have serious retirement security challenges to contend with in the U.S.,” said Covington. Research from IRI shows only 23 percent of baby boomers are confident their savings will last through retirement.

Some of the policies IRI is advocating for could be advanced administratively through rule-making by the Labor Department.

The establishment of open multiple employer plans, which would allow small businesses to more readily pool workers under one retirement plan, could be achieved through rule-making. So could a clearer safe harbor for employers when selecting annuities for retirement plans and retirement income estimates on retirement plan statements.

Other policies, like lowering the tax rates on income from annuities, increasing the required minimum distribution age for qualified retirement plans, and increased deferral levels for qualified default investment alternatives, would require action from Congress.

“There's never been a time when there was more recognition and support for moving legislation to accomplish these (retirement) goals,” said Covington, who noted that there are 11 bills in Congress that address components of IRI's Blueprint.

Covington is hopeful that Congress will take up retirement policy this year, though he acknowledged that there are no guarantees, in spite of the bipartisan support for many of the policies IRI is advocating for.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.