Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Defined Contribution East
    • 2023 ESG Investing
Breadcrumb
  1. Home
  2. REGULATION AND LEGISLATION
February 03, 2014 12:00 AM

Harkin's universal retirement plan called a good start despite some hurdles

Hazel Bradford
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    James Berglie/ZUMAPRESS.com
    The retiring Sen. Tom Harkin hopes his retirement proposal helps solve what he calls 'one of the most underreported crises in America.'

    An ambitious idea for a universal retirement program introduced Jan. 30 by Sen. Tom Harkin, D-Iowa, is being welcomed for advancing a national debate on ways to improve retirement security, but it faces an uphill climb in Congress.

    Under Mr. Harkin's Universal, Secure and Adaptable Retirement Funds proposal, employers would enroll employees in privately run plans with professional money management that are overseen by independent trustees subject to Labor Department oversight. Employers that already offer a defined benefit or 401(k) plan with automatic enrollment and lifetime income options would not have to participate.

    “I think this bill is an excellent start to a conversation that we really need to have. As the president noted (in his State of the Union address), there is a retirement problem in this country,” said Donald Fuerst, senior pension fellow with the American Academy of Actuaries in Washington.

    Mr. Harkin “has some excellent ideas in here, but there is a lot of work to be done on this bill to develop more support. I'm quite sure it will have to go through several changes to get that support,” Mr. Fuerst said. “There's going to have to be debate about which issues are more important, and I am sure there will be compromises.”

    Mr. Harkin's proposal does offer employers and employees some flexibility in participating in the new plans. Employees could contribute up to $10,000 per year tax free, and employers could contribute up to $5,000 per year. Participants could choose to opt out or change contribution rates. Existing 401(k) or individual retirement account balances could be rolled into the new plans, and benefits are portable between employers.

    But the mandate that employers make the plans available to employees is expected to have a hard time getting traction in Congress, even among Mr. Harkin's fellow Democrats. The idea “is to the left of the auto IRA” idea, which has not advanced in Congress, noted a benefits lobbyist who declined to be identified.

    Diane Oakley, executive director of the National Institute on Retirement Security in Washington, thinks the payroll-deduction mechanism for Mr. Harkin's plan, similar to the way Social Security taxes are collected, reduces the administrative burdens and costs to employers.

    An aide to Mr. Harkin estimated that pooling contributions into funds with professional money management could reduce the cost of retirement to individuals (who might be paying higher fees and getting lower investment returns) by as much as 50%. Ms. Oakley said the idea “could go a long way to put Americans on a solid financial track for their future” by providing risk sharing and lifetime benefits.

    Other proposals made

    On Jan. 29, the two ranking members of the Senate Special Committee on Aging, Chairman Bill Nelson, D-Fla., and Susan Collins, R-Maine, introduced their own retirement proposal aimed at encouraging, but not requiring, small employers to offer retirement plans, along with savings incentives for employees.

    “It's encouraging that several key members of Congress are focusing on developing an affirmative retirement policy agenda,” said Derek Dorn, a partner in Washington law firm Davis & Harman LLP and a former senior Senate tax aide whose clients now are plan sponsors and service providers. “We are seeing themes emerge that are consistent across party lines, such as creating new automatic enrollment (and) escalation safe harbors.”

    “That consistency creates reasonable prospects that these ideas could move forward,” Mr. Dorn said in an interview.

    Karen Friedman, executive vice president and policy director of the Pension Rights Center in Washington, said pension advocates endorse the basic concept of Mr. Harkin's proposal but would like a discussion about employer contributions to also take place.

    “It's certainly a very strong start,” Ms. Friedman said in an interview. “The idea of having independent platforms, into which both the employer and employees can contribute, solely for lifetime income, is a good idea. Hopefully there will be other champions.”

    Mr. Harkin, chairman of the Senate Health, Education, Labor and Pensions Committee, is working with a broad coalition of interest groups to advance the idea and work with officials in the Obama administration, which unveiled a workplace-based Roth IRA program on Jan. 29, to find common ground.

    “The "MyRA' idea is a good first step, but Congress needs to act,” Mr. Harkin said. “This is probably one of the most underreported crises in America.”

    Mr. Harkin is retiring after this congressional term and would like to leave this as his legacy, said the aide, who noted one politically attractive feature of the proposal is that “it lessens the stress on the safety net” of Social Security.

    Related Articles
    Obama, Treasury detail new MyRA savings plan
    Universal retirement legislation submitted by Harkin
    Retirement: A welcome focus from the State of the Union
    Companies bracing for 1-2 retirement punch
    NIRS: States doing better on retirement security, but there's room for improvem…
    States pushing to offer retirement accounts to private sector
    Think tank proposes new, minimum pension plan
    Sen. Patty Murray to become ranking HELP Committee member
    American Academy of Actuaries gives shared-risk model top retirement system gra…
    Obama leaves retirement issues out of speech, but proposals loom for budget add…
    Rep. Crowley calls for universal retirement accounts
    Recommended for You
    Standards-of-conduct rules approved along party lines
    Standards-of-conduct rules approved along party lines
    Investors hail SEC guidelines on exchanges
    Investors hail SEC guidelines on exchanges
    U.K. regulator watching manager over Woodford fund freeze
    U.K. regulator watching manager over Woodford fund freeze
    Research for Institutional Money Management
    Sponsored Content: Research for Institutional Money Management

    Reader Poll

    January 25, 2023
    SEE MORE POLLS >
    Sponsored
    White Papers
    The Future of Infrastructure: Building a Better Tomorrow
    Fulcrum Issues: Equity Returns and Inflation — Choose Your Own Adventure
    What Matters Most in Considering a Private Debt Strategy
    Why pursue direct lending in the core middle market?
    Research for Institutional Money Management
    Are Factors a Thing of the Past?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Defined Contribution East
      • 2023 ESG Investing