Congress Has a ‘Lame Duck’ Shot at Fixing Retirement Security

Legislation to help Americans save more for retirement is already moving forward

The months after an election aren’t exactly prime time for legislating. But with a bill long championed by Senate Finance leaders Orrin G. Hatch, right, and Ron Wyden nearly through the chamber and a similar measure moving in the House, Congress could buck the trend and act on retirement security, Conrad and Lockhart write. (Tom Williams/CQ Roll Call file photo)

OPINION — As the midterms approach, the American public’s expectations of any productive policy coming out of Washington are near rock bottom. The postelection “lame duck” session, particularly in the current partisan atmosphere, would normally be a lost cause.

Leadership by a group of lawmakers, however, has given Congress a rare opportunity: bipartisan legislation that would improve the retirement security for millions of Americans.

This legislation would help address an evolving set of challenges. As Americans live longer and employers replace defined benefit pensions with 401(k)-type plans, the burden increasingly falls on individual workers to make sure they have enough saved for retirement. This, combined with Social Security’s financial challenges, has raised the risk of individuals running short of funds in retirement.

As co-chairs of the Bipartisan Policy Center’s Commission on Retirement Security and Personal Savings, we have been warning about this situation for years, but our warnings do little good without leadership from Congress to implement effective solutions.

Luckily, recent congressional efforts to address some of the problems Americans face in saving for retirement have attracted bipartisan support. The Retirement Enhancement and Savings Act of 2018, or RESA, long championed by Republican Orrin Hatch of Utah and Ron Wyden of Oregon, is nearly through the Senate, and a similar piece of legislation was marked up by the House Ways and Means Committee just last week. RESA gives Congress the opportunity to make achieving retirement security in America easier.

A few of the bill’s highlights include:

Increasing access to workplace retirement plans.

More than a third of private-sector workers lack access to a workplace retirement plan. For many small-business owners, in particular, offering a retirement savings plan isn’t simple. They must select a plan, document it, hire a trustee, create a record-keeping system, and accept a fiduciary duty to their participants. As a consequence, just over 50 percent of small-business employees have access to a workplace retirement plan, compared to nearly 90 percent of employees at large companies.

The RESA legislation would enable the creation of pooled employer plans, which would reduce the burden for small businesses that decide to offer their employees a retirement savings option. These plans would also allow small businesses to pool their buying power into a single professionally managed plan, affording them the economies of scale and investment opportunities of much larger companies. Such an approach could help millions of Americans save for the future at a low cost to their employers.

Encourage auto-enrollment and auto-escalation features in retirement plans

Among other incentives, RESA would create a new tax credit for small employers to incentivize the adoption of automatic enrollment in workplace retirement plans. A quarter of those with access to a workplace plan choose not to participate, and others persistently contribute at levels far below what is recommended, largely due to inertia. More plans adopting automatic features will move the savings needle in the right direction.

Encourage lifetime income options.

According to the Employee Benefit Research Institute, 43 percent of Gen Xers and baby boomers are at risk of outliving their savings. RESA would move toward mitigating that risk by making lifetime income products, such as annuities, more portable for workers, and reducing the legal burden for employers that choose to offer such options to their employees.

Passing RESA would be an easy win for Congress and the American public. It is a ready-made opportunity to address the country’s growing retirement challenges. But it is far from the only bipartisan solution. A recent package of bills co-sponsored by four senators — Cory Booker, D-N.J., Tom Cotton, R-Ark., Heidi Heitkamp, D-N.D., and Todd Young, R-Ind. — would further improve access to well-designed retirement plans, help Americans save for short-term emergencies, and reduce early withdrawals from retirement accounts.

We are grateful that even in these politically polarized times, bold lawmakers are willing to put partisanship aside for the good of all Americans striving for a secure retirement. Members of Congress have an opportunity to exceed “lame duck” expectations and show the public that they can still make progress on a critical issue. We hope they seize it.

Kent Conrad, a former Democratic senator from North Dakota, and James B. Lockhart III, a former deputy commissioner and chief operating officer of the Social Security Administration under the George W. Bush administration, are both co-chairs of the Bipartisan Policy Center’s Commission on Retirement Security and Personal Savings.

The Bipartisan Policy Center is a D.C.-based think tank that actively promotes bipartisanship. BPC works to address the key challenges facing the nation through policy solutions that are the product of informed deliberations by former elected and appointed officials, business and labor leaders, and academics and advocates from both ends of the political spectrum. BPC is currently focused on health, energy, national security, the economy, financial regulatory reform, housing, immigration, infrastructure, and governance. Follow BPC on Twitter or Facebook.

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