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August 20, 2012 01:00 AM

Future of benefits a critical issue in presidential election

Government's role in retirement, health care at turning point

Hazel Bradford
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    Pressing: Sam Gilbert said it's time to think about how fund assets are invested.

    The 2012 presidential campaign comes at a turning point in the debate over the government's role in employee benefits, from a shifting landscape in retirement plans to universal health care.

    Organizations representing those interests are keenly watching where the candidates stand on the issues. With the candidates' starkly contrasting views, the 2012 campaign season promises to be anything but dull.

    Recently, 11 organizations representing employee benefits professionals submitted questions to President Barack Obama and Republican challenger Mitt Romney in an effort coordinated since 1984 by Sam Gilbert, president of The Pension Forum and of United Plan Administrators. The Westlake Village, Calif., firm consults on small-business retirement plans.

    In addition to Pensions & Investments and the Pension Forum, the organizations were the American Society of Pension Professionals & Actuaries; American Academy of Actuaries; Employers Council on Flexible Compensation; U.S. Chamber of Commerce; Society of Professional Benefit Administrators; National Institute of Pension Administrators; Plan Sponsor Council of America; and Small Business Council of America.

    The question of tax reform, and specifically the tax preference for retirement savings, was among the top concerns of the organizations.

    Both candidates are under the gun to fix the economy and to get a massive federal budget deficit under control. As a result, long-standing tax incentives for retirement savings are in the cross hairs of revenue hunters, and the groups want to remind the candidates — repeatedly — that the tax deferrals for retirement savings should be off the table because they are not outright deductions.

    “It would be really shortsighted and ill-considered to view that as a short-term way to raise revenue,” said Judy Miller, director of retirement policy for the Arlington, Va.-based ASPPA, “My question is: Do they understand that?”

    The groups also want to know what the next president will do to encourage employers to keep offering retirement plans.

    “The bottom line is that it is much more than a tax treatment,” said Edward Ferrigno, PSCA vice president of Washington affairs. “You've got both sides talking about capping contributions, but they have to understand what the impact will be on plan sponsorship and the societal impact if it reduces sponsorship.” The PSCA's question is: “The evidence is overwhelming that the single most important factor in amassing retirement assets is whether or not an employer offers a retirement plan to employees. What will you do to encourage (that)?”

    The U.S. Chamber of Commerce in Washington, suggested a good way to encourage plan sponsors is to ensure that the Obama administration's emphasis on government efficiency is also encouraged among employers, who want electronic delivery of benefit plan disclosures, and fewer regulatory hurdles.

    Social Security

    After the federal budget crisis, the groups focused on concerns over the solvency of Social Security.

    “We know there will be considerable changes to Social Security,” the NIPA notes in its question, which is why the next president will need to create more retirement savings incentives. Possible changes to Social Security include adding individual accounts and raising the retirement age. The American Academy of Actuaries, seeking to gauge the seriousness of their efforts on the issue, asks the candidates: “What is your level of concern?”

    The groups' other focus is on what do with all that money in retirement assets, which have jumped to $18.9 trillion today from $2 trillion in 1992, according to an Investment Company Institute estimate. In 1992, the groups asked then-President George H.W. Bush about possible incentives to use those assets to invest in economic development or infrastructure. Mr. Bush acknowledged it presented “a tempting pool of money” that could be used for “socially motivated investments” as long as those investments could stand on their own merits.

    Mr. Gilbert agreed that now is the time to think about what more could be done, within the rules of Employee Retirement Income Security Act.

    “Pension funds are the biggest lump of money in the world. How are we investing that money to create a better society?”

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