Bipartisanship was heavily emphasized in a webinar discussion about what will likely happen with retirement legislation in the near future.
Senator Todd Young, R-Ind., described and the “heir apparent” to outgoing Senator Rob Portman, R-Ohio, on retirement issues was the featured guest in Tuesday’s presentation jointly hosted by Empower Retirement President and CEO Edmund Murphy and Mark Bloomfield, President and CEO of the American Council for Capital Formation. Legislation that is likely to occur, and what needs to occur to solve many of the retirement income issues facing American workers, was discussed.
Social Security reform to ensure solvency moving forward was also an important topic raised by Murphy and asked of the senator.
“Full disclosure for those of you who can’t see me, I am aging too fast,” Bloomfield humorously noted by way of introduction. “I’m counting on you, Senator Young, to fix retirement policy for me before it’s too late. And for you, Eddie Murphy, to get me the best retirement plan also before it’s too late.”
Both Murphy and Young punctuated their remarks with recent successes and stark statistics about the current state of workplace retirement saving.
“We know there are some 50 million Americans that work for employers today that are not covered by workplace savings,” Murphy said. “As I think about what’s transpired over the last 30-plus years is probably one of the strongest public/private partnerships that’s ever existed between the government and the private defined contribution system. We’ve made tremendous progress and headway with well over 100 million Americans in the system today saving on a voluntary basis. But there’s a lot more we can do.”
What more can be done was the focus of Young’s remarks.
Noting that COVID pandemic has “upended communities across our nation and complicated retirement plans for so many individuals,” he added that almost half of all workers fear that they will lack sufficient retirement savings to last them throughout their lives and “other studies show that 66% of Millennials don’t feel on track when it comes to saving for retirement.”
In 2019, he was a co-sponsor of legislation to establish a federal commission charged with reviewing private retirement benefit programs and submitting a report to Congress “so that we can legislate in this base in an informed way.” Young anticipates working with Senator Cory Booker, D-NJ, to reintroduce that piece of legislation.
He also mentioned his involvement with the Retirement Security Flexibility Act, which attempts to modernize automatic enrollment and automatic escalation features, “while also easing the burdens of contribution limits for our smaller enterprises.”
The president’s proposed changes
The first question following his remarks dealt with President Biden’s campaign proposal to alter the tax deduction for 401(k) contributions. Bloomfield explained that Biden and his team believe it would “likely result in high earners getting less of a tax credit on their 401(k) savings and low and middle earners getting a bigger tax benefit.” He then asked Young if the proposal “has legs in the committees that you know so well?”
Young answered broadly, claiming that retirement savings legislation, in general, has legs in Congress, evidenced by House Ways and Means Committee Chairman Richard Neal, D-Mass., with whom Young said he enjoyed working.
“I should emphasize [that] he recently stated that he expects the House Ways and Means Committee markup of his SECURE Act 2.0, I think he said in the next few weeks,” Young said. “There is a real desire, let me reassure you, to keep retirement reform efforts bipartisan, which I wholeheartedly support. I think the key to long-lasting retirement security policy and in your business, certainty, by extension, is through bipartisanship.”
The Republican tax reform measure was what he called “pretty darn good,” but added it was achieved through a reconciliation process and a simple majority, meaning it can, and will, probably be undone.
“We don’t want the same sort of thing mimicked in the retirement security space,” Young argued.” So, I would expect, relatedly, that proposals that don’t have broad bipartisan support would be unlikely to be included in a broader retirement security package. President Biden’s 401k proposal would be a significant shift in how 401(k)s work. I’d like to see more research and analysis done on the impact this would have on retirement savings …It’s a fundamental change, so I don’t expect it would receive widespread acceptance among Republicans unless we are really highly persuaded that it’s good public policy.”
Murphy then mentioned the possibility of Social Security insolvency and necessary steps to avoid it from happening, and the “bipartisan momentum” it would take.
“Social Security is arguably easier than Medicare and Medicaid,” the senator responded. “We know what dials and levers need to be manipulated in order to bring revenues in line with expenditures.”
Current proposals include:
- Extending the age of retirement, knowing that people live longer, work longer, and are generally healthier
- Change the cost of living adjustment (COLA) for to Social Security benefits
- Supplement existing revenue with new taxes
“There’s nothing novel that I’m aware of that’s really being proposed,” Young concluded. “Partial privatization and private accounts were tried, and the problem there has always been transitions. I think you need basically a bipartisan commission charged with looking at the Social Security trust fund. It should have an equal number of Republicans and Democrats and then a super-majority agreement.”