Buried in the wake of the House of Representatives passing the SECURE Act on May 14 was the introduction—or rather reintroduction—of more retirement reform legislation in the Senate on the same day.
U.S. Senators Todd Young (R-IN) and Cory Booker (D-NJ) announced May 14 they have reintroduced the Federal Retirement Commission Act, which calls for the creation of a federal retirement commission.
The commission would review private retirement benefit programs and within two years of formation submit a report to Congress on how to improve private retirement security in the U.S. The commission would not review the Social Security program, and would be disbanded after the report is presented.
“We must work to address the shortcomings that have resulted from the shift from defined benefit pensions to defined contribution plans like 401ks,” Senator Booker said. “This bill will advance the conversation on individual retirement savings at a time when far too many have been left without the retirement they’ve planned for.”
Senator Young, a new member of the Senate Finance Committee, said he is glad that Committee Chairman Chuck Grassley is making retirement reform a priority issue for the committee.
“With many individuals reaching retirement with little to no savings of their own, we must take a serious look at our current retirement programs and make the changes necessary to help secure the futures of so many hardworking Americans,” Senator Young said. “Our bill would enact a commission to better understand how we can strengthen private benefit programs and ensure our current and future generations have the tools necessary to plan for retirement.
The Employee Benefit Research Institute predicts that over 40% of Gen Xers will run short of money in retirement, and just under half of all private-sector workers aren’t participating in a retirement savings plan through their employer, according to the U.S. Bureau of Labor Statistics.
A press release announcing the bill noted private retirement systems have undergone significant changes over the past 40 years as traditional pensions have become less common, and that individuals must now prudently plan for their own retirement security through retirement savings accounts like 401k plans.
It also noted that in today’s economy, an increasing percentage of workers are part of the “gig economy,” defined by serial employment or the contingent workforce. For these workers, it is particularly difficult to save for their own retirement.
The proposed legislation follows a 2017 report by the Government Accountability Office that recommended the creation of an independent panel of experts to assess the current system and make recommendations to improve the nation’s collective retirement security. It has been nearly 40 years since a federal commission has conducted a survey of this scope.
Commission directives
Specifically, the Federal Retirement Commission Act:
- Calls for the creation of a commission comprised of the Secretary of Treasury, Labor, Commerce, two presidential appointees, six U.S. Senate appointees, and six U.S. House of Representatives appointees.
- The commission will be charged with:
- A comprehensive review of private benefit programs existing in the United States, with a particular focus on moving from defined benefit to defined contribution models.
- A comprehensive review of private retirement coverage, individual and household accounts balances, investment trends, costs and net returns, and retention and distribution during retirement.
- A comprehensive review of societal trends, including wage growth, economic growth, unique small business challenges, serial employment, gig economy, health care costs, life expectancy, and shrinking household size, that could lead future generations to be less financially secure in retirement compared to previous generations.
- A comprehensive review of other countries’ retirement programs.
- Submitting to Congress recommendations on how to improve or replace existing private retirement programs upon the affirmative vote of at least three-quarters of the members of the Commission.
Supporters applaud ‘first step’
Former North Dakota Senator Kent Conrad and the Honorable James B. Lockhart III, co-chairs of the Bipartisan Policy Center Commission on Retirement Security and Personal Savings issued this statement in support of the proposed legislation:
“We know that reaching bipartisan solutions to America’s retirement challenges is not easy, because the commission we led at the Bipartisan Policy Center worked for several years to do that ourselves. But with this groundwork laid, it is time for Congress to lead on the issue of retirement security and make the important policy decisions necessary to ensure more Americans are ready for retirement. We believe this bipartisan legislation from Senators Young and Booker is a productive first step towards that goal.”
Click here to view the bill text.