Brian Graff, CEO of the American Retirement Association and Executive Director of NAPA, shared some eye-opening projections during his testimony at a July 28 Senate Finance Committee hearing, titled, “Building on Bipartisan Retirement Legislation: How Can Congress Help?” [A video of the entire hearing can be viewed at this link]
“The potential results of Congress tackling the two biggest challenges in the retirement savings policy space—closing the retirement coverage gap and directly contributing to and incentivizing the retirement savings of moderate-income workers—are extraordinary,” Graff testified. “Estimates show that enactment of the combination of the Automatic IRA Act and the Encouraging Americans to Save Act would create 51 million new individuals now saving for retirement and would add an additional $6.2 trillion in retirement savings over a 10-year period. Nearly all—98%—of these 51 million new savers earn less than $100,000 per year.”
Those projections quickly caught the attention of Senate Finance Committee Chairman Ron Wyden (D-OR), who convened the hearing along with Ranking Member Mike Crapo (R-ID). Immediately following the testimony from Graff and fellow expert witnesses Aliya Robinson of the ERISA Industry Committee, David Certner of AARP, and Oregon State Treasurer Tobias Read, Wyden circled back to Graff for his first question.
“You gave everybody really a jaw-dropping statistic early on,” Wyden said, referring to the projected 51 million new savers and $6.2 trillion in additional retirement savings in a decade.
“What you’re saying is that if you encourage non-savers to save, and those with limited savings to save more, that can really be a loadstar for America’s future with respect to retirement savings?”
“Absolutely Mr. Chairman,” Graff responded. “It would have a tremendous impact on frankly the potential for a comfortable retirement for tens of millions of Americans who currently don’t have access. We know that getting access to [retirement savings plans in] the workplace as well as auto-enrollment—which is part of these proposals—works. The data is absolutely, positively clear.”
Graff went on to say these ideas have proven to work, and scaling auto-enrollment at a national level would be a huge difference-maker.
“We’re trying to employ, basically the success of how 401ks in the private workplace have succeeded and apply it much more universally,” Graff responded to Wyden. “And the data is very clear on this. This will work.”
Graff said he encourages the Senate Finance Committee and Congress to pass both pieces of legislation, and also highlighted provisions from a number of other retirement reform bills introduced this year that would support and expand the workplace retirement savings system.
Specifically, here are some excerpts from provisions Graff mentioned:
- Student Loan Retirement Matching Program: The ARA strongly supports Chairman Wyden’s Retirement Parity for Student Loans Act (S. 1443, 117th Congress) which allows plan sponsors to make an employer contribution to the retirement plan account that matches a percentage of an employee’s student loan payments.
- Emergency Savings in Retirement Plans: The ARA supports proposals—like Senator Lankford’s and Senator Bennet’s Enhancing Emergency and Retirement Savings Act (S. 1870, 117th Congress)—to create a new category of retirement plan distribution that would allow workers who have a balance in these accounts to readily access their money in the case of a personal financial emergency without tax penalty and a minimal amount of paperwork.
- Small Employer Retirement Plan Tax Credit Enhancements: Section 102 of House Ways and Means Committee Chairman Neal’s and Ranking Member Brady’s Securing a Strong Retirement Act (H.R. 2954) (a.k.a. SECURE 2.0) increases the existing small employer pension plan start-up credit for employers with 50 or fewer employees [from 50%] to 100% of administrative retirement plan expenses for the first three tax years of a new retirement plan.
- Pooled Employer Plans: Senator Grassley’s, Senator Hassan’s, and Senator Lankford’s Improving Access to Retirement Savings Act (S. 1703, 117th Congress) has thoughtfully included two provisions that address technical issues with respect to these so-called “open” pooled employer plans, building upon the improvements made to these arrangements in the 2019 SECURE Act. The first provision would allow 403(b) plans that are generally sponsored by charities and public educational organizations, to participate in open multiple employer plans as corporate plans can currently. The second provision would allow employers who wish to join an existing multiple employer plan to receive the small employer pension plan startup credit. These provisions would improve access to high-quality low-cost retirement plans for the benefit of small business rank-and-file workers.
Graff also highlighted a handful of other useful retirement plan tools and rule fixes, which can be found near the end of the ARA’s 10-page testimony document.
In his opening remarks, Wyden said this is a subject on which the Finance Committee has a long track record of bipartisan progress, “including a bill made up of dozens of ideas from both sides in 2016. After a lot of work, that bill became law [as the SECURE Act] a few years later. I hope today’s hearing is a launching pad for the committee to develop another bipartisan retirement package in the months ahead.”
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