In an address to the Society of Professional Asset-Managers and Record Keepers (SPARK), Empower Retirement President Edmund F. Murphy III called on retirement industry leaders to join forces to form a united coalition when engaging policy makers and regulators on issues of common concern.
Murphy told the audience that Empower would work in conjunction with SPARK to help promote the development of a proactive policy agenda. The effort would include the development of an industry-wide forum in which members could build a set of agreed-upon priorities and use their collective expertise and experience to help legislators and regulators understand the value and benefits behind various proposals.
In addition, Murphy outlined a series of goals derived from many years of policy development work led by Great-West Financial President and CEO Robert L. Reynolds:
- Correcting the tax window: Preserve and expand all existing savings incentives and correct the false “scoring” and 10-year “window” used today by the Treasury Department to account for the cost of savings deferrals;
- Fixing the access gap: Provide workplace savings to all working Americans—by supporting legislation to facilitate multiple employer plans, “starter” 401(K) plans and auto-IRAs at the federal level;
- Providing larger—and refundable—tax credits to small employers and savers: Small companies that establish plans must have a greater incentive to do so. The incentive could be extended to part-time, freelance, and contract workers who establish IRAs. Expanded testing safe harbors should be developed for small employers;
- Requiring auto features: Require the adoption of “full-auto-suite” plan design (with participant opt-out) and establish an industry norm that will achieve deferral rates of 10% or more.
- Encouraging greater adoption of lifetime income options: Workers should have a tax incentive to choose guaranteed income options. In addition, plan sponsors should be encouraged to provide lifetime distribution options;
- Alleviating health care expenses: Allow retirees to make tax-free withdrawals from qualified plans if they are used to cover supplemental health insurance or medical expenses.
Murphy noted that a key attribute of the 2006 Pension Protection Act was the “real sense of collaboration between policy makers and the industry to help the 401(k) in its continuing evolution to better meet the needs of the workforce.” He said, “This is a model we should and must embrace once again.”
Murphy urged retirement industry colleagues to leverage their established credentials as innovators and knowledgeable experts to drive enhancements to the retirement system. He noted that with 90 million Americans in defined contribution plans the retirement industry collectively holds an important position of trust.
“We know our business better than anybody. We hold the core competencies to drive innovative solutions and better outcomes,” said Murphy. “We will lead the needed improvements to America’s retirement system. It’s our job—and we need to make it our mission.”