On Tuesday, June 14, the leaders of the American Retirement Association and its sister organizations stormed Capitol Hill to meet with key staff and get a fresh perspective on the congressional legislative and policy agenda for the year.
The group, which included the Presidents and Presidents-Elect of the American Retirement Association and each sister organization — ASPPA, NAPA, ACOPA, and NTSA — reminded these policy decision makers why the retirement savings tax incentives are critical to the formation and maintenance of workplace retirement plans. In addition, association leaders told the Hill staff that the determining factor in whether or not a middle income worker saves for retirement is if he or she has access to a workplace retirement plan.
Understanding that the system has been successful for those that have access to it, the discussions then pivoted to how we could improve the system even further. For instance, required notices and disclosures could be communicated to participants and beneficiaries electronically. The NAPA leadership argued that this change could significantly lower plan administrative costs and allow plan sponsors to more easily switch to a better performing investment lineup (as well as have a positive impact on our environment). Also, the ASPPA leadership explained how the top heavy rules could be rationalized to encourage expanding the availability of existing 401(k) plans to part-time workers and as well as remove any traps for the unwary for those plan sponsors who allow employees to participate in a plan within a year of being hired.
The ACOPA leadership described to these staffers – who serve on the congressional committees with jurisdiction over retirement policy — the impact that the recent repeated increases in both the single and variable rate premiums paid to the Pension Benefit Guaranty Corporation (PBGC) are having on the private defined benefit system. Larger employers, who might already be inclined to terminate their DB plan, can now borrow money at rates and amounts that are lower than what they now have to pay to the PBGC. In other words, the economics of de-risking or shutting down a defined benefit plan is getting more attractive, thereby accelerating the death of DB plans in the private workforce.
Another key policy topic that was discussed during the meetings is the issue of opening multiple employer plans (MEPs) to any unrelated employer. The sense of urgency to allow this through legislation has grown on Capitol Hill as a result of several new state laws requiring employers over a certain size to have a retirement plan of some type for employees combined with new Department of Labor guidance tilting the playing field toward state sponsored retirement programs. The ARA leadership argued that if Congress were to head down this path, there should be a designated plan service provider in place to ensure the proper operation of the plan in order to protect the participating small employers.
In all, it was a productive day of meetings that only further nurtured our relationships with the key staff on Capitol Hill that develop the policy affecting the private retirement system. It indicates the importance of member participation in our government affairs committees because that participation and activism builds the credibility we need to be viewed as objective retirement policy experts.
Andrew Remo is the American Retirement Association's Director of Congressional Affairs.