Income Initiatives; Social Security

President Obama’s State of the Union address included a number of retirement savings initiatives that he’d like to see enacted: the automatic IRA, an expanded savers credit, updating 401(k) regulations to improve transparency and reliability, as well as using annuities as a way to turn savings into a guaranteed lifetime income.

Robert Reynolds, president and CEO of Putnam Investments, suggests a bipartisan commission to develop an action plan on how to make Social Security solvent by November 3, 2010. Social Security is “the cornerstone of most Americans’ retirement,” Reynolds said during a speech at the National Institute on Retirement Security (NIRS) policy conference in Washington February 2. The basic solution to saving Social Security, which is “matching Social Security revenues with outflows, is relatively simple,” he said, and much easier than solving the healthcare crisis. Reynolds is also pushing hard for Congress and the administration to ensure that provisions of the Pension Protection Act of 2006 (PPA)–which called for auto enrollment, auto escalation, and qualified default options in 401(k) plans–become mandatory. Those provisions are now optional at the plan sponsor level, he says, but studies have shown that those 401(k) plans that have adopted these provisions have shown huge success in getting more people to save.