The National Commission on Fiscal Responsibility and Reform failed on Friday to endorse its deficit-cutting report, which included a proposal to dramatically cut the amount of tax-deferred contributions that could be put into defined contribution plans.
The report was approved by 11 of the commission’s 18 members — three short of the 14 votes needed for official endorsement, according to President Barack Obama’s Feb. 18 executive order establishing the group.
A commission staff member who asked not to be identified said some of the deficit-cutting proposals still might be promoted by Mr. Obama and federal lawmakers on their own; he did not say whether that would include the tax-deferred contribution.
Mark Ugoretz, president of the ERISA Industry Committee, said in an interview: “Merely because they failed to get the 14 out of 18 votes doesn’t mean that the curtailment of retirement savings is off the table.”
“The commission’s majority report includes a number of specific proposals that I — along with my economic team — will study closely in the coming weeks as we develop our budget and priorities for the coming year,” Mr. Obama said in a statement issued by the White House on Friday.
The plan contribution proposal suggested limiting the total combined tax-deferred contributions that employees and employers could make to DC plans to 20% of an employee’s annual earnings, or $20,000, whichever is smaller.
The current combined employer/employee cap is $49,000 a year.
The report also included giving the PBGC authority to raise both its flat and premium rates “to cover potential liabilities,” the report said. The Pension Benefit Guaranty Corp.’s current fixed-rate premium is $35 per participant per year. The current variable rate premium is $9 per $1,000 of underfunding. The report didn’t set a limit for how high the agency would be able to raise the rates.