September 10, 2012
--- The government tries to lend its hand to the retirement readiness goal, but other agendas may get in the way. ---
The middle class has taken a hit from the recession, and the least-understood repercussion of this has been the hit to retirement savings, according to Marcia S. Wagner, principal at The Wagner Law Group. “Each leg of the three-legged stool is wobbly,” she told attendees of the 2012 PLANADVISER National Conference, referring to the three sources of retirement income for Americans – Social Security, employer-sponsored retirement plans and personal savings.
While lawmakers have gotten involved in efforts to solve the retirement crisis, with legislation and proposals to increase savings, promote better returns in retirement plans and facilitate decumulation planning, their efforts on tax reform to solve the nation’s budget crisis threatens to undo it all, Wagner contended.
She noted that the Pension Protection Act of 2006 helped to increase savings by giving statutory cover to plan sponsors that adopt automatic enrollment and automatic escalation. This led to plan sponsor and plan adviser initiatives to re-enroll and/or re-allocate all employees, which Wagner said do not have statutory cover, but sponsors and advisers should nevertheless move forward - because she thinks these initiatives will soon. Automatic IRAs have also gained bi-partisan support from lawmakers, which would increase savings for employees of the smallest employers.