More On Legal & Compliancefrom The Advisor's Professional Library
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- The Need for Thorough and Effective Policies and Procedures Whethere an advisor is SEC or state-registered, RIAs must revise their policies and procedures to address significant compliance problems occurring during the year, changes in business arrangements, and regulatory developments.
As Washington is embroiled in the debate over how to avert the fiscal cliff, Sen. Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee, said Thursday that he was confident lawmakers “would address it.”
Arriving a bit late to the Women’s Institute for a Secure Retirement annual women’s retirement symposium in Washington, Harkin told attendees that a vote on a trade agreement had delayed his arrival and that he had just got word that Congress “may vote on a debt limit extension “ on Thursday afternoon.
Calling the fiscal cliff a “slope,” Harkin said lawmakers in Washington get “overwrought with one crisis and forget others,” namely the retirement income crisis. What isn’t being talked about, he said, is the “retirement deficit: what people have saved compared to what they should have saved,” for retirement, which he estimated presents a $6.6 trillion deficit. He called the deficit “truly frightening,” especially for women, as they continue to only make 70 cents for every dollar men earn. During the years women stop working to, for instance, raise children or take care of elderly parents, they lose approximately $659,000 over a lifetime, Harkin said.
The retirement deficit crisis, Harkin said, prompted him to recently pen a report, "The Retirement Crisis and a Plan to Solve It", which includes a proposal to provide universal access to pension plans called Universal, Secure, and Adaptable (USA) Retirement Funds.
Harkin said that he intends to put his report “in bill form” when the new Congress convenes in January.
Harkin said his plan is two pronged: USA Retirement Funds as well as expanding Social Security benefits by $65 per month.
As Harkin’s report notes, USA Retirement Funds are innovative, privately run, hybrid pension plans that incorporate many of the benefits of traditional pensions while substantially reducing the burden on employers. Under this proposal, “there would be universal access to USA Retirement Funds through the existing payroll withholding systems for those that do not already have access to a retirement plan, and anyone participating would have the opportunity to earn a cost-effective and portable source of retirement income,” the report states. USA Retirement Funds, the report adds, would have professional asset management and give people an easy way to pool their risk.
As to Social Security, the report cites The Rebuild America Act introduced in March 2012, which contains a comprehensive plan to improve Social Security. “That plan would improve benefits to help reduce the retirement income deficit, ensure the cost of living adjustment better corresponds to the typical expenses for seniors, and improve the long-term financial condition of the trust fund by gradually lifting the cap on wages subject to payroll taxes,” the report says.
Raising Social Security benefits by $65 per month “would not put the Social Security trust fund in more jeopardy,” Harkin told WISER attendees, “because I propose to lift the cap on the payroll tax to extend the life of the trust fund, over a 10-year period. This change would extend the life of the [Social Security] trust fund beyond 2050.”