President Barack Obama has released his Fiscal Year 2017 Budget Proposal.
In January, Department of Labor (DOL) Secretary Tom Perez introduced a number of retirement proposals to be included in President Obama’s 2017 budget, including efforts to allow employers access to open multiple employer plans (MEPs) and encouraging greater portability of retirement savings when employees change jobs.
The budget also continues the work of the administration’s initiatives that have already begun, such as the conflict of interest rulemaking, the myRA retirement savings vehicle, and the current state-sponsored retirement plan initiative.
In a statement, American Benefits Council President James A. Klein expressed support for the open MEP initiative. And, SIFMA President and CEO Kenneth E. Bentsen, Jr. said “We support the president’s goal of increasing retirement savings through greater access to workplace accounts and creating more portable options. We believe that federal programs like MyRA and open MEPs bring us closer to that goal.”
Lew Minsky, president and CEO of the Defined Contribution Institutional Investment Association (DCIIA), said, “the administration’s proposal to increase retirement savings portability by making it easier for participants to roll their accounts from plan to plan when they change jobs and consolidate their retirement savings with their current employer is a welcome step in the right direction.” He pointed to a recent research brief in which the DCIIA suggested retirement plan leakage is a critical area of focus for both retirement plan sponsors and policymakers.NEXT: Still some concerns
While SIFMA supports the MEP and portability initiatives, Bentsen, Jr. said “We remain opposed to the Department of Labor’s conflict of interest rule that will only harm investors by limiting choice and access to advice while raising the cost of saving for retirement.”
The American Benefits Council also finds some initiatives troubling. “We continue to have strong concerns about the president’s encouragement of state-based retirement programs, which have the potential to disrupt existing employer plans,” Klein said.
The Council has been active in efforts to have the Patient Protection and Affordable Care Act’s (ACA’s) excise tax on high-cost health plan repealed. The prior budget delays implementation of the tax from 2018 to 2020 and makes the tax deductible for employers. In the new budget proposal, Obama suggests adjustments for those who live in high-cost geographic areas.
The Council finds this adjustment insufficient and irrelevant. “The only way to fix this tax is to repeal it entirely,” Klein said.
The ERISA Industry Committee (ERIC) also has concerns about the so-called Cadillac tax. “While we appreciate recognition of the budget’s implicit acknowledgment that the excise tax is imposed inequitably on those who live in high-cost geographic areas, full repeal is the only answer. This proposed adjustment completely disregards the other uncontrollable factors that are used to calculate the tax, as well as the detrimental effects the tax could have on employer-sponsored health care plans, which is why ERIC continues to push for full repeal,” said Annette Guarisco Fildes, president and CEO of ERIC.
More about the president’s proposals is in this budget document from the White House.