EIG’s John Lettieri Refutes ARA Claims of Proposed Bill’s Challenge to Private Retirement Plan System
When American Retirement Association CEO Brian Graff told attendees at the recent NAPA 401(k) Summit in San Diego that a new bill expected in Congress soon could mark the beginning of a “year’s long battle” over the future of America’s private retirement plan system, the charged rhetoric didn’t sit too well with people behind the proposal.
The ARA leader likened the “Retirement Savings for Americans Act” to a giant multiple employer plan run by the government, and warned that if it were to pass, it would amount to unfair competition and would upend the entire private retirement plan system.
The legislation, expected to be reintroduced in Congress within weeks by a bipartisan working group of legislators, is largely based on a proposal made in a 2021 white paper from the Economic Innovation Group that seeks to address the retirement plan coverage gap faced by low- and moderate-income Americans. This initiative is seen as a step towards closing the significant retirement savings gap, offering a more inclusive and equitable financial future for all.
EIG has made it known it doesn’t agree with ARA’s stance that the proposal and the legislation based on it would threaten the future of the private retirement plan system, and we wanted to hear why they think the concern stems from a “fundamental disconnect.”
To that end, our podcast guest is Economic Innovation Group CEO John Lettieri, who explains why he thinks the new plan would indeed NOT compete with the existing private retirement plan system and why the lower-income retirement plan coverage gap needs to be addressed now, highlighting the importance of bipartisan efforts in crafting solutions that benefit a wider demographic.
SEE ALSO:
• TSP-Like ‘Retirement Savings for Americans Act’ Introduced with Eye on 2023
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His answer about why the Government MEP doesn’t need to be covered by ERISA was weak. He stated that government programs like the TSP are never subject to ERISA. True but they cover governmental employees. The Government MEP would cover private sector employees competing directly against ERISA plans. Would love to know more about how the match/tax credit works. He dodged that question too. If the employer doesn’t pay for the match, I guess the tax payer does? We have a retirement system for low wage workers called social security and it’s run very poorly. If he wants to throw out social security and mandate a program like this, I’m all for it. You’d do a lot better sending ~14% of your income to the TSP than you would sending it to social security. Otherwise, I see this as the government getting involved where it shouldn’t.