Both parties have been talking about tax reform to broaden the revenue base and lower tax rates. Both parties are also under pressure to deal with the federal budget. In the quest to find revenue and to set the stage for major tax reform, several commissions have suggested limiting or eliminating most tax expenditures, including the one for retirement savings, which has been identified as one of the top three most expensive tax expenditures. Yet the deferral of income tax on contributions to qualified retirement plans has led to tens of millions of American workers being covered by employer-based retirement plans — including defined benefit, 401(k) plans and similar arrangements — and will provide tax revenue when current savers retire and draw benefits.
2012 PRESIDENTIAL CANDIDATE EMPLOYEE BENEFIT QUESTIONNAIRE
With research showing that cutting these tax incentives will hurt retirement savings at all income levels, the American Society of Pension Professionals and Actuaries asks: Do you support maintaining the current tax incentives for retirement savings?
Considering the tax expenditure generated by the retirement plan system is the time value of money, and the data show the system not only provides retirement security income for millions of American workers, but also is the most effective way for Americans to save, the Small Business Council of America asks: What is your position on the cost of this tax expenditure, and do you favor cutting back contributions to plans or putting other limitations on the current system?
The National Institute of Pension Administrators notes that the growing uncertainty over Social Security and the increases in life expectancy make it more important than ever to support the private retirement plan system and keep the tax incentives for employer-based retirement savings programs, and asks: Are you willing to support the private retirement plan system by preventing the reduction of employer and employee contribution limits, minimizing burdensome and unnecessary IRS regulations, and creating further tax incentives for small businesses to implement these plans for their employees?
A 2012 lifetime income survey done by Putnam Investments and Brightwork Partners showed that Social Security forms the baseline for virtually all Americans' retirement future. It provides a basic floor of economic protection in retirement that the individual can enhance through private retirement programs and personal savings. Yet the system faces a multitrillion dollar long-term funding shortfall. Several independent commissions have suggested that funding gap, and the attendant uncertainty it creates, can be fixed by a balanced combination of future benefit adjustments and revenue enhancements. If you are elected president this November, will you commit to undertaking a balanced, bipartisan approach to restoring Social Security's long-term solvency? Yes or no?
The evidence is overwhelming that the single most important criteria in amassing retirement assets is whether or not an employer offers a retirement plan to its employees. However, offering a retirement plan results in additional cost, complexity, and liability for business owners. These issues are most acute for small business owners. As president, what will you do to encourage businesses to offer a retirement plan to their workers?
A July 11, 2012, report from the Congressional Research Service discusses several areas of concern regarding Social Security. These concerns include: the program's financial outlook (outgo soon to exceed intake); public confidence in the program (including doubts about Social Security's value); and widely diverse views on how to reform the system (including debate over individual accounts, the payroll tax rate and retirement age issues). What is your level of concern, and what specific proposals would your administration bring to Congress to address these concerns?
More than 65 million Americans, the vast majority of whom are middle class, rely upon account-based health plans, such as flexible spending arrangements, health reimbursement arrangements and health savings accounts to provide part of the health-care services they need. All of these accounts help individuals meet cost-sharing obligations or pay for benefits not otherwise covered by insurance. They are particularly important for patients with chronic illnesses, who often have multiple health care visits each month and/or rely on maintenance medications, and for whom even nominal cost-sharing can quickly add up. These arrangements also encourage more efficient health care decision-making since participants treat the funds as their own and spend them more wisely.
ECFC strongly believes that in a reformed health care system, it is imperative not only to ensure the continued availability of these plan types, but also to adopt policy changes that further promote their value to employers, employees, and their dependents.
Do you support the continued availability of these plan types in a reformed health-care system? What steps would you take to make them even stronger benefit tools, such as the elimination of the FSA use-or-lose-it rule and support for regulations that further their effectiveness?
It is widely understood that price transparency in the US health-care system would greatly help in bending the cost curve downward. Consumers recognize that they could make better decisions if they had more information on medical procedures and options for care. Even though consumers are responsible for an increasing portion of their medical costs, they are not informed about the price of such services until after they have been rendered, often by providers whom they did not even know were involved in their care.
There is a provision in the “Patient Protection and Affordable Care Act” (Section 2718(e) of the Public Health Service Act) that holds great promise for placing the U.S. on a path toward health-care price transparency. Thus far, there are no regulations to implement this provision in a meaningful way for consumers. What would be your approach to take advantage of this provision to provide consumers with the information they desperately need to manage their health care decisions?
The Investment Company Institute, in a recent release, estimated retirement assets in this country at $18.9 trillion, up from $2 trillion in 1992.
The 1992 Presidential Candidate Employee Benefit Questionnaire asked President Bush: "Do you envision any incentives or encouraging voluntary pension investment into economic development, small business or infrastructure investing?"
President Bush responded: "ERISA requires that pension fiduciaries handle plan assets in the best interest of plan participants. The $2 trillion currently held by private pension plans is a significant role in capital formation in this country and presents a tempting pool of money to finance ventures unrelated to pension benefits. Since 1974, the Department has consistently stated that, in deciding whether to make an investment, a fiduciary may not accept a lower rate of return for the plan than is appropriate given the degree of risk involved with the investment. To do so would impose an economic cost on pension plans resulting in either lower benefits for participants or higher costs for plan sponsors. To the extent that socially motivated investments do not compromise the economic balance of risk and return to the plan and are consistent with other requirements, they are not improper. However, pension assets should not be used to subsidize investments that cannot stand on their own merits."
Given the current debate that envisioning two stark economic choices, austerity vs. stimulation by additional debt, combined with staggering liabilities that confront state and local governments, would your administration enter a dialog that explores both sides of this issue, to include the dire need for targeted investments on one hand and working within the retirement plan rules of exclusive benefit, prudence, diversification, suitability and the necessity of achieving the opportunity for a risk adjusted market return, on the other hand? In short, do you affirm President Bush's response, partially agree or disagree, and how would you answer the question?
What would your administration do to preserve defined benefit plans and ensure that defined contribution plans provide adequate lifetime income in retirement?