At a Senate Health, Education, Labor, and Pensions (HELP) Committee hearing last week, “Pension Savings: Are Workers Saving Enough for Retirement?”, the tone and substance of the hearing were generally encouraging for advocates of the employer based retirement system. Committee members were receptive to ideas and suggestions from the witnesses on how to boost participation and saving rates through steps like simplifying the existing regulations, increasing the tax incentives for businesses to sponsor qualified retirement plans, and incentivizing plan design features.
One witness, Brigitte Madrian, the Aetna Professor of Public Policy and Corporate Management at Harvard Kennedy School, put her finger on the main roadblock facing retirement income options. “Employers provide several valuable services to their employees which it comes to the investment options in their DC plans,” Madrian noted, including their ability to “evaluate the many available alternatives and select the few options that are best suited to their employees’ needs, and they are able to offer employees lower cost investment options than the employees would have access to individually through economies of scale. Having employers perform the same function for retirement income options would be a valuable service to many current and former employees, but employers currently have little incentive to do so.” Madrian’s prepared remarks are here.
Do you have an idea for turning the tables on this issue? Share it in the comment box below.
