Ed Murphy isn’t going to take it lying down. Despite criticism of the 401(k) savings vehicle, most recently from U.K. comedian John Oliver, “it’s the best and most viable vehicle to achieve widespread retirement security,” according to the president of Empower Retirement.
Speaking to attendees of the morning keynote at 2016 SPARK National Conference in Washington, D.C. Monday morning, Murphy called for unity in the industry ranks to better present a cohesive voice to lawmakers.
“Now is the time for the leadership in the retirement industry to be proactive and suggest the policy measures we will want from the new presidential administration and the new Congress, which will take office in January 2017,” Murphy said. “We cannot ask legislators and regulators to work with us if we’re not, as an industry, approaching them with a consensus and actionable set of goals to advance the retirement system for all working Americans.”
Murphy told the audience that Empower would work in conjunction with SPARK to help promote the development of a “proactive policy agenda.” The effort would include the development of an industry-wide forum in which members “could build a set of agreed-upon priorities and use their collective expertise and experience to help legislators and regulators understand the value and benefits behind various proposals.”
Mentioning high-profile Great-West Financial president and CEO Bob Reynolds (which owns Empower), Murphy outlined a series of goals for the initiative, which include:
- Correcting the tax window: Preserve and expand all existing savings incentives and correct the false “scoring” and 10-year “window” used today by the Treasury Dept. to account for the cost of savings deferrals.
- Fixing the access gap: Provide workplace savings to all working Americans— by supporting legislation to facilitate multiple employer plans, “starter” 401(K) plans and auto-IRAs at the federal level.
- Providing larger—and refundable—tax credits to small employers and savers: Small companies that establish plans must have a greater incentive to do so. The incentive could be extended to part-time, freelance, and contract workers who establish IRAs. Expanded testing safe harbors should be developed for small employers.
- Requiring auto features: Require the adoption of “full-auto-suite” plan design (with participant opt-out) and establish an industry norm that will achieve deferral rates of 10 percent or more.
- Encouraging greater adoption of lifetime income options: Workers should have a tax incentive to choose guaranteed income options. In addition, plan sponsors should be encouraged to provide lifetime distribution options.
- Alleviating health care expenses: Allow retirees to make tax-free withdrawals from qualified plans if they are used to cover supplemental health insurance or medical expenses.
Murphy noted that a key attribute of the 2006 Pension Protection Act Most was the “real sense of collaboration between policy makers and the industry to help the 401(k) in its continuing evolution to better meet the needs of the workforce. This is a model we should and must embrace once again.
“By working together the impact of our collective engagement could be far more effective than what any one of us could accomplish alone,” he concluded. “How we are engaging is just as important as what we are seeking to do. We know our business better than anybody. We hold the core competencies to drive innovative solutions and better outcomes. We will lead the needed improvements to America’s retirement system. It’s our job–and we need to make it our mission.”