Life Insurer Group Backs Federal Auto-Retirement Plan Requirement
Richard Neal's bill would require most employers to offer a payroll deduction-based retirement savings plan.
The American Council of Life Insurers (ACLI) says it likes the idea of requiring most U.S. employers to enroll workers in retirement savings programs automatically.
The ACLI is endorsing the return of the Automatic Retirement Plan Act bill.
(Related: If House Flips, Retirement-Focused Democrat Would Likely Be Ways and Means Chair)
Rep. Richard Neal, D-Mass., who is now the chairman of the House Ways and Means Committee, introduced a version of the bill, H.R. 4523, in the last Congress.
The ACLI is expecting Neal to reintroduce the bill later this year.
The Old Version
H.R. 4523 would have required most for-profit employers, and some nonprofit employers, with more than 10 employees to set up automatic contribution retirement plans. Employees could choose to opt out of the plans.
A trust linked to an automatic contribution plan could offer a lifetime income portability option. A plan could provide portability through a “qualified plan distribution annuity contract.”
The bill would impose an excise tax an affected employers that failed to offer an automatic contribution plan, and it would offer a tax credit for small employers that did offer automatic contribution plans.
Some provisions would grandfather in existing employer retirement plans set up under some state and local retirement programs already in effect.
The list of organizations supporting H.R. 4523 included the Insured Retirement Institute.
The ACLI’s Views
ACLI says that the new version of Neal’s bill could lead to 30 million more Americans having access to retirement savings, and to about 22 million more Americans saving for retirement.
“This bold approach is clearly needed to close the retirement savings gap and prevent a retirement crisis,” ACLI President Susan Neely said in a statement included in the announcement of ACLI’s endorsement. “People are living longer without adequate retirement savings and increasing access to workplace plans can be a powerful solution. This proposal is designed to make it easier for employers to offer retirement plans.”
Workers could opt out, but studies have shown that about 80% of employees who have a chance to contribute to an employer-sponsored retirement plan do so, Neely said.
“Endorsing an employer requirement is not a policy shift that ACLI makes lightly,” Neely said. “We believe the scope of the looming crisis demands fresh thinking. Automatically enrolling workers into a retirement savings plan is not a big new government program. It is a market-based solution that can help more people save more of their own money for the good of their families’ futures. Family financial security is the ultimate peace of mind.”
— Read IRI Backs 401(k) Mandate for Employers, on ThinkAdvisor.
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