State Street Global Advisors' President and CEO Ronald O'Hanley is calling on Congress to enact legislation that ensures workplace retirement savings coverage for all private-sector workers in the U.S.
In an open letter to Congress released June 6, Mr. O'Hanley proposed a framework that expands access to workplace retirement savings plans and ensures coverage through auto enrollment, auto escalation, tax incentives for small employers and eliminates barriers to open multiple-employer plans.
Mr. O'Hanley wrote that he believes the framework could reduce the expected retirement savings shortfall by up to $740 billion. In his letter, he said the Employee Benefit Research Institute pegged the shortfall at more than $4 trillion as of February 2015.
“America's looming retirement crisis … will require multiple remedies and hard choices. But we cannot afford to delay acting any longer,” Mr. O'Hanley wrote.
In his letter, Mr. O'Hanley calls for federal legislation that includes the following key elements for increased access to retirement savings in the workplace:
• require private employers to auto-enroll all workers into a defined contribution plan;
• require the use of auto escalation and default investments such as target-date funds to help employees maximize retirement savings;
• enact tax credits for small employers to cover the administrative costs of implementing these plans; and
• eliminate barriers to open MEPs to allow businesses to band together and offer affordable retirement savings plans.
The full text of Mr. O'Hanley's letter and policy proposal is available on SSGA's website.