PEW Event on Retirement
Pew Charitable Trust
“State Approaches to Addressing Inadequate Retirement Savings
Thursday, June 23, 2016
Key Topics & Takeaways
- Approaches: John Scott asked the panel what approaches they are taking in developing a retirement plan for their state. Utah Senator Todd Weiler explained that when creating a state retirement program, he would “not vote for a plan that would make the state subject to ERISA.” Bleier explained that the industry is supportive of the market place option for state retirement plans because of its established infrastructure while the other options are costly and time consuming.
- Challenges: Scott questioned the panelists on the challenges they faced when attempting to pass their legislation. Colorado State Representative Brittany Pettersen explained that though she received “pushback” from the industry, she ensured that private sector feedback from the beginning is essential.
Moderators
- John Scott, Director, Retirement Savings Project, The Pew Charitable Trusts
- Angela Antonelli, Executive Director, Center for Retirement Initiatives, McCourt School of Public Policy, Georgetown University
Panelists
- Colorado State Representative Brittany Pettersen
- Indiana State Representative Sean Eberhart
- Utah State Senator Todd Weiler
- Lisa Bleier, Managing Director and Associate General Counsel, Securities Industry and Financial Markets Association
- Gerri Madrid-Davis, Director, AARP
Opening Statement
John Scott, Director, Retirement Savings Project, The Pew Charitable Trusts
John Scott stressed the importance of retirement savings while noting that while there has been no major federal legislation since the Pension Protection Act of 2006, there is plenty of activity on the state level. Scott focused on states plans, their availabilities and participation. He listed the factors associated with access and participation in various states’ plans, such as employer size, the industry itself, wage and salary income, age, education and race and ethnicity. Scott gave the example that although 70 percent of full-time workers in Wisconsin have access to a retirement plan, there are still 400,000 full-time employees without access to a retirement plan in the state.
Scott noted that the three public policy goals PEW established for states when developing a state retirement plan include: 1) Increasing retirement savings; 2) Minimizing burdens for employees; and 3) Managing legal and financial risks for states. He added that states interested in developing a plan face the threshold questions of establishing whether their state program should be subject to the Employee Retirement Income Security Act (ERISA) and whether the state wants to be a plan-sponsor. Scott presented three state policy options for retirement plans: 1) Be subject to ERISA and be a state-sponsored plan, as Massachusetts has done;2) Not be subject to ERISA and be a state-sponsored plan, like payroll deduction automatic individual retirement account (Auto-IRA);and 3) Be subject to ERISA but not be a state-sponsored plan, like the marketplace option in Washington.
Panel One: 2016 Legislative Review
Scott asked the panel what approaches they are taking in developing a retirement plan for their state. Indiana State Representative Sean Eberhart stated that the state’s role was to create an internet portal where small businesses could be linked to private plans. He added that while Indiana does not have a state run plan, a small board was appointed to maintain the private plans. Utah Senator Todd Weiler explained that when creating a state retirement program, he would “not vote for a plan that would make the state subject to ERISA.”
Scott questioned the panelists on the challenges they faced when attempting to pass their legislation. The panel agreed that a major of adversity is the “intense lobbying” from the financial industry for their “fear of not being included into the plans.” Eberhart added that his colleagues were afraid the program would be state-run and concluded that his issues were a result of education or lack thereof. Colorado State Representative Brittany Pettersen explained that though she received “pushback” from the industry, she ensured that private sector feedback from the beginning is essential. With that, Scott asked why the industry was opposed to their state retirement plans. Weiler believes that the financial industry “did not like the government saying which plan was better, thus having to pick a winner and loser.”
Scott asked how the private sector could help move their policies forward. Weiler suggested asking for feedback at every stage of plan development. Pettersen recommended collaborating with the private sector to address the concerns for individuals that have never been targeted to participate in retirement plans.
Opening Statement
Angela Antonelli, Executive Director, Center for Retirement Initiatives, Georgetown University
Angela Antonelli described the activity on the state level for retirement plans as “incredible.” Antonelli added that the retirement space has progressed because it is a top financial concern among families. She stated that 20 to 30 percent of American families have neither a defined benefit (DB) or defined contribution (DC) savings. She stated that in the City of Philadelphia, 54 percent of the working population does not have access to a retirement plan through their employer, one third of seniors live at 150 percent below the poverty line, and 21 percent of the population lives on food stamps. Antonelli concluded that though tremendous progress has been made by states, a number of challenges remain.
Panel Two: Looking Ahead to 2017
Gerri Madrid-Davis, AARP Director, emphasized on AARP’s continued efforts to protect retirement savings and social security. She described the pathway of state retirement plans to that of the 529 savings plans where states took initiatives then the federal government followed with implementation. Madrid-Davis stated that given the state leadership, there is an opportunity to increase coverage for the 55 million Americans who do not have retirement savings.
Lisa Bleier, Managing Director and Associate General Counsel at SIFMA, welcomed the overall dialogue on retirement savings, especially across the states. She affirmed that the U.S. is a “spending culture, not a saving culture,” but Americans need to start saving for retirement. Bleier added that financial institutions are thinking of innovative approaches to help individuals save. She confirmed that SIFMA is happy to work with states to help increase the number of people who are thinking about saving as they did in Washington.
Antonelli commented on the Department of Labor’s (DOL) proposed state regulations and the interpretive bulletin released in late 2015 and asked if there should be any changes on the final regulations. Madrid-Davis stated that AARP requested three simple asks: 1) To make a clear path for states to move forward on their retirement plans; 2) Ensure auto enrollment could be allowed in voluntary and mandated plans; and 3) Large cities should be allowed to pave the way if they have leadership in large areas. Bleier described SIFMA as a “defender of ERISA” and would be very concerned if every single state, city, local jurisdiction came out with different eligibility requirements. She added that in regard to the interpretive bulletin, the industry was disappointed that states could run open Multiple Employer Plans (MEPs), but not the private sector.
Antonelli asked what some of the challenges states faced to get state programs started. Bleier explained that the industry is supportive of the market place option because of its established infrastructure while the other options for plans are costly and time consuming. She believes there are “a lot of structural issues in these state plans that need to be addressed.” Madrid-Davis added that having the final regulations published will assist states that continue to seek guidance.
Antonelli noted in regard to the upcoming election, she questions whether the new Administration will continue to address the gap in retirement security for private sector workers. Madrid-Davis explained that the national polls state retirement security is now a priority for both parties. She affirmed that Americans are more concerned about retirement security and it is changing the nature of the debate. Madrid-Davis added that AARP is focusing on social security as it continues to be up to 50 percent or 90 percent of individuals’ retirement savings. Bleier noted the importance of retirement security, but also added that in the highly anticipated tax reform, candidates and government officials should encourage the preservation of tax credit incentives.
For more information on this hearing, please click here.
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Pew Charitable Trust
“State Approaches to Addressing Inadequate Retirement Savings
Thursday, June 23, 2016
Key Topics & Takeaways
- Approaches: John Scott asked the panel what approaches they are taking in developing a retirement plan for their state. Utah Senator Todd Weiler explained that when creating a state retirement program, he would “not vote for a plan that would make the state subject to ERISA.” Bleier explained that the industry is supportive of the market place option for state retirement plans because of its established infrastructure while the other options are costly and time consuming.
- Challenges: Scott questioned the panelists on the challenges they faced when attempting to pass their legislation. Colorado State Representative Brittany Pettersen explained that though she received “pushback” from the industry, she ensured that private sector feedback from the beginning is essential.
Moderators
- John Scott, Director, Retirement Savings Project, The Pew Charitable Trusts
- Angela Antonelli, Executive Director, Center for Retirement Initiatives, McCourt School of Public Policy, Georgetown University
Panelists
- Colorado State Representative Brittany Pettersen
- Indiana State Representative Sean Eberhart
- Utah State Senator Todd Weiler
- Lisa Bleier, Managing Director and Associate General Counsel, Securities Industry and Financial Markets Association
- Gerri Madrid-Davis, Director, AARP
Opening Statement
John Scott, Director, Retirement Savings Project, The Pew Charitable Trusts
John Scott stressed the importance of retirement savings while noting that while there has been no major federal legislation since the Pension Protection Act of 2006, there is plenty of activity on the state level. Scott focused on states plans, their availabilities and participation. He listed the factors associated with access and participation in various states’ plans, such as employer size, the industry itself, wage and salary income, age, education and race and ethnicity. Scott gave the example that although 70 percent of full-time workers in Wisconsin have access to a retirement plan, there are still 400,000 full-time employees without access to a retirement plan in the state.
Scott noted that the three public policy goals PEW established for states when developing a state retirement plan include: 1) Increasing retirement savings; 2) Minimizing burdens for employees; and 3) Managing legal and financial risks for states. He added that states interested in developing a plan face the threshold questions of establishing whether their state program should be subject to the Employee Retirement Income Security Act (ERISA) and whether the state wants to be a plan-sponsor. Scott presented three state policy options for retirement plans: 1) Be subject to ERISA and be a state-sponsored plan, as Massachusetts has done;2) Not be subject to ERISA and be a state-sponsored plan, like payroll deduction automatic individual retirement account (Auto-IRA);and 3) Be subject to ERISA but not be a state-sponsored plan, like the marketplace option in Washington.
Panel One: 2016 Legislative Review
Scott asked the panel what approaches they are taking in developing a retirement plan for their state. Indiana State Representative Sean Eberhart stated that the state’s role was to create an internet portal where small businesses could be linked to private plans. He added that while Indiana does not have a state run plan, a small board was appointed to maintain the private plans. Utah Senator Todd Weiler explained that when creating a state retirement program, he would “not vote for a plan that would make the state subject to ERISA.”
Scott questioned the panelists on the challenges they faced when attempting to pass their legislation. The panel agreed that a major of adversity is the “intense lobbying” from the financial industry for their “fear of not being included into the plans.” Eberhart added that his colleagues were afraid the program would be state-run and concluded that his issues were a result of education or lack thereof. Colorado State Representative Brittany Pettersen explained that though she received “pushback” from the industry, she ensured that private sector feedback from the beginning is essential. With that, Scott asked why the industry was opposed to their state retirement plans. Weiler believes that the financial industry “did not like the government saying which plan was better, thus having to pick a winner and loser.”
Scott asked how the private sector could help move their policies forward. Weiler suggested asking for feedback at every stage of plan development. Pettersen recommended collaborating with the private sector to address the concerns for individuals that have never been targeted to participate in retirement plans.
Opening Statement
Angela Antonelli, Executive Director, Center for Retirement Initiatives, Georgetown University
Angela Antonelli described the activity on the state level for retirement plans as “incredible.” Antonelli added that the retirement space has progressed because it is a top financial concern among families. She stated that 20 to 30 percent of American families have neither a defined benefit (DB) or defined contribution (DC) savings. She stated that in the City of Philadelphia, 54 percent of the working population does not have access to a retirement plan through their employer, one third of seniors live at 150 percent below the poverty line, and 21 percent of the population lives on food stamps. Antonelli concluded that though tremendous progress has been made by states, a number of challenges remain.
Panel Two: Looking Ahead to 2017
Gerri Madrid-Davis, AARP Director, emphasized on AARP’s continued efforts to protect retirement savings and social security. She described the pathway of state retirement plans to that of the 529 savings plans where states took initiatives then the federal government followed with implementation. Madrid-Davis stated that given the state leadership, there is an opportunity to increase coverage for the 55 million Americans who do not have retirement savings.
Lisa Bleier, Managing Director and Associate General Counsel at SIFMA, welcomed the overall dialogue on retirement savings, especially across the states. She affirmed that the U.S. is a “spending culture, not a saving culture,” but Americans need to start saving for retirement. Bleier added that financial institutions are thinking of innovative approaches to help individuals save. She confirmed that SIFMA is happy to work with states to help increase the number of people who are thinking about saving as they did in Washington.
Antonelli commented on the Department of Labor’s (DOL) proposed state regulations and the interpretive bulletin released in late 2015 and asked if there should be any changes on the final regulations. Madrid-Davis stated that AARP requested three simple asks: 1) To make a clear path for states to move forward on their retirement plans; 2) Ensure auto enrollment could be allowed in voluntary and mandated plans; and 3) Large cities should be allowed to pave the way if they have leadership in large areas. Bleier described SIFMA as a “defender of ERISA” and would be very concerned if every single state, city, local jurisdiction came out with different eligibility requirements. She added that in regard to the interpretive bulletin, the industry was disappointed that states could run open Multiple Employer Plans (MEPs), but not the private sector.
Antonelli asked what some of the challenges states faced to get state programs started. Bleier explained that the industry is supportive of the market place option because of its established infrastructure while the other options for plans are costly and time consuming. She believes there are “a lot of structural issues in these state plans that need to be addressed.” Madrid-Davis added that having the final regulations published will assist states that continue to seek guidance.
Antonelli noted in regard to the upcoming election, she questions whether the new Administration will continue to address the gap in retirement security for private sector workers. Madrid-Davis explained that the national polls state retirement security is now a priority for both parties. She affirmed that Americans are more concerned about retirement security and it is changing the nature of the debate. Madrid-Davis added that AARP is focusing on social security as it continues to be up to 50 percent or 90 percent of individuals’ retirement savings. Bleier noted the importance of retirement security, but also added that in the highly anticipated tax reform, candidates and government officials should encourage the preservation of tax credit incentives.
For more information on this hearing, please click here.