Testifying at a Feb. 26 Senate Finance Subcommittee hearing on retirement savings for low-income workers, Judy Miller, the Director of Retirement Policy for ASPPA and NAPA, explained how the current private employer-sponsored retirement plan system is working for tens of millions of American workers, many of whom are on the lower end of the income distribution scale.
The system is not perfect, Miller acknowledged, saying that more can be done to build on the success of the current system — like expanding access to employer-sponsored retirement plans.
The hearing also featured testimony from Mark Iwry, Deputy Assistant Secretary at the Treasury Department, Diane Oakley, Executive Director of the National Institute on Retirement Security and Stephen Utkus, Director at the Vanguard Center for Retirement Research. For more information about the hearing, including video, member statements and testimony, click here.
Miller highlighted several legislative proposals that would be effective in expanding employer-sponsored retirement plan access to workers while preserving existing plans. Many of these proposals are contained in the Secure Annuities for Employee Retirement (SAFE) Act, introduced last year by Sen. Orrin Hatch (R-UT), the Ranking Member of the Senate Finance Committee. Hatch’s bill contains a “Starter 401(k)” proposal that NAPA supports — a new safe harbor for a deferral-only 401(k) plan in which deferrals would be limited to $8,000, with a $2,000 catch-up contribution for near-retirees — and other proposals that would simplify the operation of retirement plans. NAPA also supports auto-IRA proposals that would expand access to workplace savings.
While these policy prescriptions are not “sexy” or dramatic, they would encourage small business owners to keep their current retirement plans and further incentivize employers to establish new retirement plans for their employees, Miller said.
Sen. Sherrod Brown (D-OH), Chairman of the Senate Finance Subcommittee on Social Security, Pensions and Family Policy, who ran the hearing, chose to focus instead on the more misleading and alarming statistics peddled by interest groups that want to dismantle the employer-sponsored retirement system — statistics suggesting that the current tax incentives for retirement saving only benefit the rich and that DC plans are a flawed savings vehicle for workers.
At one point during the discussion, Brown branded anyone who supports the current system a “retirement crisis denier.” This narrative, and the dangerous rhetoric that accompanies it, is a reminder of the need to continue to educate decision-makers on Capitol Hill about the design and effectiveness of the current retirement system — a system that needs to be enhanced, not destroyed.
Andrew Remo is ASPPA’s Congressional Affairs Manager.
