Throughout the presidential campaign, during the transition and at his inauguration, Joe Biden has consistently said he wants to renew bipartisanship in Washington. But the first step is finding something both parties can agree on. Fortunately, that challenge is not as monumental as it might seem. President Biden can encourage Congress to pass retirement reform legislation that already has wide bipartisan support, and he can lead Congress to where it is already aiming, making 401(k) and similar plans more like real pensions.
There are many legislative proposals circulating in Washington that would improve various aspects of the defined contribution system, but it is time for Congress to stop beating around the bush. It is time to address the core issue — the need for guaranteed lifetime income. Employers that offer 401(k) type plans should be required to automatically enroll workers in an option that provides lifetime income. Only then will employees finally have lifetime security in 401(k) plans that is similar to the lifetime security in traditional pension plans.
This isn't a radical or new idea. It is the direction that retirement policy has been heading for years. President Biden can seize on the strong bipartisan support that already exists for broad retirement reform legislation, and he can take it the one step further that is the logical endpoint of current bipartisan policies.
Retirement policy has been aiming at auto enrollment in lifetime income solutions for more than 20 years. Over that time, the three overarching legislative and regulatory themes have been auto enrollment, the encouragement of guaranteed income inside defined contribution plans and the potential requirement that 401(k) plans include lifetime income options.