Orrin Hatch Speaks on Retirement Legislation
Financial Services Roundtable Event
“Retiring Around the Globe: How the U.S. compares with the rest of the world”
Monday, December 15, 2014
Key Topics & Takeaways
- SAFE Act: Sen. Hatch highlighted his legislation, the Secure Annuities of Employees (SAFE) Retirement Act, as a tool to increase the retirement security of Americans.
- Encouraging Savings: Hatch argued that the tax code should encourage savings and investment and said the current system of 401(k) plans and individual retirement accounts (IRAs) is the “greatest wealth creator for the middle class in history.”
- No Compulsory System: Principal Global Investors CEO McCaughan noted that the U.S. will not tolerate a compulsory system that has been successful in other countries
Witnesses
- Senator Orrin Hatch, Incoming Chairman, Senate Finance Committee
- Ed Farrington, Executive Vice President of Retirement, Natixis
- Jim McCaughan, CEO, Principal Global Investors
- Edmund Murphy, President, Empower Retirement
- Pablo Antolin, Lead Author and OECD Principal Economist for Private Pensions
“The Future of the 2015 Senate Finance Committee & Beyond”
Senator Orrin Hatch, Incoming Chairman, Senate Finance Committee
Incoming Senate Finance Committee Chairman Orrin Hatch (R-Utah) gave prepared remarks at a Financial Services Roundtable (FSR) event this morning, outlining the 2015 priorities for the Committee and his pension reform bill, the Secure Annuities for Employees (SAFE) Retirement Act of 2013, which he said received the “highest marks” from the Urban Institute.
Hatch said priorities will include renewing trade promotion authority (TPA) and fixing the “broken tax code.” He highlighted his recent committee staff report, a comprehensive discussion draft regarding tax reform, noting that the tax code was last reformed 30 years ago. Hatch argued that the tax code should encourage savings and investment and said the current system of 401(k) plans and individual retirement accounts (IRAs) is the “greatest wealth creator for the middle class in history.” He called any proposals that reduce the tax incentives to save “short-sighted and foolish,” and said “healthy contribution limits” are important to encourage saving.
Panel Discussion: Retiring Around the Globe
“Global Retirement Issues and the Way Forward”
Ed Farrington, Executive Vice President of Retirement, Natixis
Farrington gave an overview of the Natixis 2014 Global Retirement Index, which compares pension systems in 150 countries. He noted that while the U.S. has been improving, its rank has been stagnant at position 19 out of 150 as other countries’ pension systems have advanced at a faster rate. He highlighted the New Zealand system which has progressed quickly due to automatic enrollment, incentives, broad access, and a mandatory employer match. Farrington offered a comparison to the private pension system in the U.S., noting the importance of incentives, access, and advice.
“What Can Americans Improve About Our Retirement System”
Jim McCaughan, CEO, Principal Global Investors
McCaughan noted that while other countries may be ranked higher, the U.S. will not tolerate a compulsory system that has been successful elsewhere. McCaughan argued for an improved environment to secure funding which generates capital, and noted the importance of building on the voluntary employer system and the benefit of tax incentives to encourage saving. McCaughan also said that the low-interest rate environment is hurting savings.
“The State of American Retirement: Can We Afford It?”
Edmund Murphy, President, Empower Retirement
Murphy said that features endorsed by the Pension Protection Act of 2006 have grown in use and said it is important to focus on what is working with the current system.
Questions
During questions, Murphy said the industry is doing a lot to improve the retirement system in the U.S. but noted challenges remain with small employers. He suggested mandating that small businesses offer a plan and incentives for them to use it, but said regulations should not require an employer match. McCaughan argued that a mandate would not be well received by companies still “bruised” from the healthcare regulations. He said that labor market growth will spur plan formation.
When asked what lessons the U.S. could learn from other countries, Farrington noted that the Nordic countries are ranked as having the best retirement systems and highlighted that those systems all maintain some type of “three-legged stool” approach through public, private, and individual responsibilities. He noted the importance of strengthening this system in the U.S. McCaughan said incentives are important to preserve and Murphy agreed.
Unveiling of “OECD Pensions Outlook 2014” Report
Pablo Antolin, Lead Author and OECD Principal Economist for Private Pensions
Antolin gave a presentation outlining the Organisation for Economic Co-Operation and Development (OECD) Pensions Outlook 2014 report. The report describes a number of challenges facing retirement systems in OECD countries and features five chapters which explore: 1) the challenges arising from an aging population; 2) post-crisis pension reforms; 3) the role of private pensions; 4) increasing private pension and automatic enrollment schemes; and 5) pension communications.
The report highlights areas where work remains to be done in strengthening retirement systems, including: how to balance sustainability and adequacy; maintaining a diversification of public and private systems; addressing conflicts of interest in pension advisors; improving the structure of the payout phase; and improving the functioning of incentives.
The report is available at the OECD Online Bookshop.
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Financial Services Roundtable Event
“Retiring Around the Globe: How the U.S. compares with the rest of the world”
Monday, December 15, 2014
Key Topics & Takeaways
- SAFE Act: Sen. Hatch highlighted his legislation, the Secure Annuities of Employees (SAFE) Retirement Act, as a tool to increase the retirement security of Americans.
- Encouraging Savings: Hatch argued that the tax code should encourage savings and investment and said the current system of 401(k) plans and individual retirement accounts (IRAs) is the “greatest wealth creator for the middle class in history.”
- No Compulsory System: Principal Global Investors CEO McCaughan noted that the U.S. will not tolerate a compulsory system that has been successful in other countries
Witnesses
- Senator Orrin Hatch, Incoming Chairman, Senate Finance Committee
- Ed Farrington, Executive Vice President of Retirement, Natixis
- Jim McCaughan, CEO, Principal Global Investors
- Edmund Murphy, President, Empower Retirement
- Pablo Antolin, Lead Author and OECD Principal Economist for Private Pensions
“The Future of the 2015 Senate Finance Committee & Beyond”
Senator Orrin Hatch, Incoming Chairman, Senate Finance Committee
Incoming Senate Finance Committee Chairman Orrin Hatch (R-Utah) gave prepared remarks at a Financial Services Roundtable (FSR) event this morning, outlining the 2015 priorities for the Committee and his pension reform bill, the Secure Annuities for Employees (SAFE) Retirement Act of 2013, which he said received the “highest marks” from the Urban Institute.
Hatch said priorities will include renewing trade promotion authority (TPA) and fixing the “broken tax code.” He highlighted his recent committee staff report, a comprehensive discussion draft regarding tax reform, noting that the tax code was last reformed 30 years ago. Hatch argued that the tax code should encourage savings and investment and said the current system of 401(k) plans and individual retirement accounts (IRAs) is the “greatest wealth creator for the middle class in history.” He called any proposals that reduce the tax incentives to save “short-sighted and foolish,” and said “healthy contribution limits” are important to encourage saving.
Panel Discussion: Retiring Around the Globe
“Global Retirement Issues and the Way Forward”
Ed Farrington, Executive Vice President of Retirement, Natixis
Farrington gave an overview of the Natixis 2014 Global Retirement Index, which compares pension systems in 150 countries. He noted that while the U.S. has been improving, its rank has been stagnant at position 19 out of 150 as other countries’ pension systems have advanced at a faster rate. He highlighted the New Zealand system which has progressed quickly due to automatic enrollment, incentives, broad access, and a mandatory employer match. Farrington offered a comparison to the private pension system in the U.S., noting the importance of incentives, access, and advice.
“What Can Americans Improve About Our Retirement System”
Jim McCaughan, CEO, Principal Global Investors
McCaughan noted that while other countries may be ranked higher, the U.S. will not tolerate a compulsory system that has been successful elsewhere. McCaughan argued for an improved environment to secure funding which generates capital, and noted the importance of building on the voluntary employer system and the benefit of tax incentives to encourage saving. McCaughan also said that the low-interest rate environment is hurting savings.
“The State of American Retirement: Can We Afford It?”
Edmund Murphy, President, Empower Retirement
Murphy said that features endorsed by the Pension Protection Act of 2006 have grown in use and said it is important to focus on what is working with the current system.
Questions
During questions, Murphy said the industry is doing a lot to improve the retirement system in the U.S. but noted challenges remain with small employers. He suggested mandating that small businesses offer a plan and incentives for them to use it, but said regulations should not require an employer match. McCaughan argued that a mandate would not be well received by companies still “bruised” from the healthcare regulations. He said that labor market growth will spur plan formation.
When asked what lessons the U.S. could learn from other countries, Farrington noted that the Nordic countries are ranked as having the best retirement systems and highlighted that those systems all maintain some type of “three-legged stool” approach through public, private, and individual responsibilities. He noted the importance of strengthening this system in the U.S. McCaughan said incentives are important to preserve and Murphy agreed.
Unveiling of “OECD Pensions Outlook 2014” Report
Pablo Antolin, Lead Author and OECD Principal Economist for Private Pensions
Antolin gave a presentation outlining the Organisation for Economic Co-Operation and Development (OECD) Pensions Outlook 2014 report. The report describes a number of challenges facing retirement systems in OECD countries and features five chapters which explore: 1) the challenges arising from an aging population; 2) post-crisis pension reforms; 3) the role of private pensions; 4) increasing private pension and automatic enrollment schemes; and 5) pension communications.
The report highlights areas where work remains to be done in strengthening retirement systems, including: how to balance sustainability and adequacy; maintaining a diversification of public and private systems; addressing conflicts of interest in pension advisors; improving the structure of the payout phase; and improving the functioning of incentives.
The report is available at the OECD Online Bookshop.