Congress should pass another major retirement security package to expand automatic enrollment, make it easier for small businesses to offer retirement plans and to create a national database for lost retirement accounts, experts told House lawmakers Wednesday.
A panel of witnesses spoke highly of the Securing a Strong Retirement Act, also referred to as SECURE Act 2.0, during a House Health, Employment, Labor, and Pensions Subcommittee hearing. The bill was reintroduced May 4 by the leaders of the House Ways and Means Committee — Chairman Richard Neal, D-Mass., and Ranking Member Kevin Brady, R-Texas — and passed unanimously out of committee on May 5.
The bill includes dozens of provisions aimed at boosting retirement security, including requiring 401(k), 403(b) and SIMPLE plans to automatically enroll participants upon becoming eligible at a floor of 3% of pay. That contribution is then increased — unless the participant opts out — by 1 percentage point each year until it reaches 10%.
Following a question from Rep. Donald Norcross, D-N.J., on automatic enrollment, David Certner, legislative counsel and director of legislative policy for government affairs at the AARP, said it puts workers on track for a better retirement.
"Most employees when they join up are not thinking about retirement and it's good to have the system automatically putting them in the right direction," he said.
Rep. Rick Allen, R-Ga., the subcommittee's ranking member, said there's room for bipartisanship and commonsense policy updates that can boost Americans' retirement security. "As this committee considers updates to ERISA we must focus on expanding access to defined contribution plans, increasing retirement options for employees of small businesses, making plans more transparent and eliminating the need for future taxpayer-funded bailouts of special interests," Mr. Allen said.
He criticized a provision in the American Rescue Plan, which Democrats passed in March, that created a federal assistance program for struggling multiemployer pension funds. Democrats have said the move was necessary and will save taxpayer money over the alternative of plan insolvencies and additional funds needed for the Pension Benefit Guaranty Corp.
Also during Wednesday's hearing, lawmakers were told about the importance of Social Security and the inequities in the nation's retirement system.
"The employer-sponsored retirement system leaves out many groups of workers and jobs, in a manner that disproportionately impacts women and people of color, particularly Blacks and Latinos," Nari Rhee, director of the retirement security program at the University of California at Berkeley, said in her written testimony. She told lawmakers to strengthen Social Security, including benefit enhancements for low-wage workers and caregivers, and to create a national system of universal retirement plan coverage to supplement Social Security.
Andrew Biggs, a senior fellow at the American Enterprise Institute, said the warnings about the American retirement system are overstated. "The data show clearly that never before have so many Americans saved so much for retirement, he said. "Never before has retiree income been so high or poverty in old age so low."
Nonetheless, he too urged Congress to pass the SECURE Act 2.0. "We need to keep working to fill the gaps that remain in our system so that every American who wants and needs to save for retirement has an easy and affordable way to do so."
The House has yet to vote on the bill, nor has one been scheduled, but with bipartisan support, hopes are high in the retirement industry it will pass this year.
