Bipartisan legislation introduced in the Senate Wednesday would create a federal commission to give Congress suggestions on how to improve private retirement benefits programs.
Action on the bill co-sponsored by Sens. Todd Young, R-Ind., and Cory Booker, D-N.J., has not been scheduled.
"America's private retirement system faces major challenges in the modern economy and research shows that far too many households are unprepared for retirement," Mr. Young said in a statement.
Mr. Booker said that "the most important thing we can do to ensure Americans' retirement security is to protect and strengthen Social Security," which the proposed commission would not review. "Beyond that, we must work to address the shortcomings that have resulted from the shift from defined benefit pensions to defined contribution plans like 401(k)s. This bill will advance the conversation on individual retirement savings at a time when far too many have been left without the retirement they've planned for."
The bill was based on a 2017 report by the Government Accountability Office that recommended establishing an independent panel of experts to assess the current system and make recommendations. The bill's co-authors note that it has been nearly 40 years since a federal commission conducted a similar survey.
"This is reflective of the fact there is a bipartisan consensus that we need significant improvement to our retirement system in this country. While it is working well for some people, it is leaving some people behind, and even for those where it is working, it is complex. At least part of the motivation here is to make the system work more effectively," said Shai Akabas, director of economic policy at the Bipartisan Policy Center in Washington.
Mr. Akabas said he is optimistic that the Senate will soon act on another bipartisan bill, the proposed Retirement Enhancement and Savings Act of 2018, introduced March 8 by Finance Committee Chairman Orrin Hatch, R-Utah, and ranking member Ron Wyden, D-Ore, and later in the House. It covers a lot of retirement savings ideas, few of which are considered controversial.
Sponsors of closed defined benefit plans would gain easier nondiscrimination testing rules, and plans sponsored by cooperatives and small-employer charities would enjoy a much smaller premium to the Pension Benefit Guaranty Corp. RESA also calls for lifting a 10% safe-harbor cap on default contributions for automatic enrollment and escalation in defined contribution plans.
"I think we are seeing some momentum there that we hadn't seen before," Mr. Akabas said.
Hazel Bradford is a reporter at InvestmentNews' sister publication, Pensions&Investments.