-Congress consistently has punted on resolving long-term problems in the crucial retirement-related programs Social Security and Medicare. But it is moving in a bipartisan way to improve workers' access to quality private sector retirement plans.
The House Ways and Means Committee unanimously has approved the Setting Every Community up for Retirement Enhance Act, and the companion Retirement Enhancement and Savings Act has bipartisan support in the Senate.
Only 4% of American workers are enrolled in traditional fixed-benefit pension plans that ensure a measure of retirement security, a decline from more than 60% in 1980.
The most common retirement savings plans are the market-sensitive 401(k) tax-deferred plan and its variants.
But millions of workers don't have access to those because they work for small employers that don't offer plans, often because of limited revenue and the regulatory burden and administrative costs.
Federal law allows small employers to join with others to spread the administrative and regulatory costs, but only if they have a common bond. Often, small construction contractors offer a multiple employer plan.
The new bills would allow any small employers to join in offering a plan, and to allow financial companies that administer plans to recruit new companies to the fold.
Another aspect of the proposals would diminish the volatility risks of 401(k)s by allowing the plans by offering annuities to enrollees at group rates to ensure a baseline of lifetime income. Employers could do that now but most do not, fearing that they could be stuck with millions of dollars of pension liability if the financial company administering the plan fails.
The new bills would absolve employers of any liability for such a development.
These bills are sound ways to expand private-sector retirement saving and foster security in retirement for millions more Americans. Congress quickly should make them law.
(c)2019 The Citizens' Voice (Wilkes-Barre, Pa.)
Visit The Citizens' Voice (Wilkes-Barre, Pa.) at citizensvoice.com
Distributed by Tribune Content Agency, LLC.