WASHINGTON, June 24, 2016 /PRNewswire-USNewswire/ -- Marking the 10th anniversary of the passage of the Pension Protection Act of 2006 (PPA), widely considered the most important retirement legislation since the Employee Retirement Income Security Act of 1974 (ERISA), the Aspen Institute today brought together on Capitol Hill Members of Congress, federal officials, financial-industry leaders, advocates, and scholars to evaluate the Act's impacts, assess the current situation, and explore policy solutions to achieve greater retirement security for tens of millions of Americans.
"Our nation is facing an urgent saving and retirement security crisis -- one that we must address now," Rep. Joe Crowley (D-NY), who addressed today's forum, said. "With too many Americans not saving enough for the future, fewer private-sector workers being offered pensions, and a host of other challenges facing potential retirees, the dream of a secure retirement is slipping away for millions of Americans."
PPA Has Encouraged Retirement Savings in Defined Contribution Plans
The PPA touched on many aspects of retirement policy, and had important impacts on traditional worker pensions. For 401(k)s and other similar defined contribution (DC) plans, it drew on insights from behavioral economics to incentive increase savings. The PPA encouraged plan sponsors to adopt automatic enrollment and automatic escalation in contributions in employer-provided DC plans, as well as provided for qualified default investment alternatives (QDIAs) to help plan participants avoid inappropriate investments and legal safe harbor for plan sponsors. As employers and financial-services providers have put these provisions into practice, participation rates in firms that offer retirement plans have increased and asset allocation has shifted toward more balanced investments.
"Some of the most beneficial factors that lift retirement readiness can be traced to the 2006 Pension Protection Act," Edmund F. Murphy III, President, Empower Retirement, said. "We have a great opportunity to make this country more prosperous and more just."
Retirement Security Remains an Elusive Goal for Most Americans
However, half of the nation's workers (and two-thirds of prime working-age Americans) do not have an employer-sponsored retirement savings plan—a proportion that has risen since the beginning of the century and that is much higher for low-wage workers. Default contribution rates are low and optional. Savings incentives perversely benefit the wealthy much more than low- and moderate-income (LMI) Americans. In addition, the well-intentioned Saver's Credit, created in 2001 and made permanent by the PPA, also has poorly designed and insufficient incentives for LMI workers. As only one-fifth of Americans are "very confident" that they will have enough money to live comfortably during their ever-longer retirement years, retirement security remains an elusive goal.
"Retirement security impacts every American family, and Congress must be committed to finding innovative solutions to solve our growing retirement gap," Rep. Jared Polis (D-CO), who addressed today's forum, said. "Helping families plan for retirement is not a partisan issue; it's an issue that needs problem solvers. That's why I'm pleased to be participating as a guest of the Aspen Institute, and to be joining other public officials and industry experts as we look for solutions that work for the next generation of retirees."
Nearly nine in 10 Americans believe that retirement security should be a significant issue in this year's election, and two-thirds of the public say that Congress should do more to help Americans save for retirements, according to an Aspen Institute poll conducted earlier this month.
Speakers and panelists addressed how the United States can extend the successes of the PPA to ensure that all families can take advantage of proven strategies for retirement savings, as well as the challenges that will require far-reaching policy changes in support of, and in tandem with, changes in employer and individual behavior. These include:
- Far too many Americans still lack any coverage under an employer-sponsored retirement-savings plan, and many more have inadequate coverage;
- Automatic enrollment and auto escalation need to be strengthened so that more employees with access to a plan participate and contribute more money;
- Savings incentives in the tax code, which now disproportionately benefit higher-income Americans, need to be redesigned so that the more benefits go to LMI workers; and
- With ever more Americans retiring and living longer, long-term policy, investment, and behavioral strategies for decumulation from retirement plans need to be devised to help ensure that retirees have decent incomes throughout their lives.
"While the Pension Protection Act took significant steps to better ensure Americans' well-being in retirement, too many people have so little savings that they face the grim prospect of poverty later in life," Ida Rademacher, executive director of the Aspen Institute's Financial Security Program, said. "Bold action on many fronts is essential to enable tens of millions of working Americans and their families to achieve retirement security."
The event featured keynote remarks from:
- The Honorable Joseph Crowley, U.S. Representative, New York, 14th District
- The Honorable Jared Polis, U.S. Representative, Colorado, 2nd District
- Edmund F. Murphy III, President, Empower Retirement
Keynote remarks were accompanied by two panels of distinguished retirement experts:
- Keith Ambachtsheer, Director Emeritus, International Centre for Pension Management, Rotman School of Management, University of Toronto
- Derek Dorn, Managing Director and Head of Regulatory Engagement and Policy, TIAA
- The Honorable J. Mark Iwry, Senior Advisor to the Secretary and Deputy Assistant Secretary for Retirement and Health Policy, U.S. Department of the Treasury
- John J. (Jamie) Kalamarides, Chairman & CEO, Prudential Bank & Trust and Senior Vice President, Prudential Retirement, The Prudential Insurance Company of America
- Kilolo Kijakazi, Institute Fellow, The Urban Institute
- Anne Lester, Head of Retirement Solutions for Global Investment Management Solutions, JP Morgan Asset Management
- Lew Minsky, President and CEO, Defined Contribution Institutional Investment Association
- Diane Oakley, Executive Director, National Institute on Retirement Security
- Jack VanDerhei, Research Director, Employee Benefit Research Institute
To learn more about the event, please see: http://www.aspeninstitute.org/events/2016/06/24/retirement-savings-goes-automatic. For information on the work of Aspen's Financial Security Program, please see: www.aspenfsp.org.
The Aspen Institute Financial Security Program (FSP) is dedicated to solving the most critical financial challenges facing America's households, and to shaping policies and financial products that enable all Americans to save, invest, and own. For more information on Aspen FSP, please visit www.aspenfsp.org.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/capitol-hill-event-highlights-successes-of-the-10-year-old-pension-protection-act-and-the-continuing-challenges-in-achieving-retirement-security-for-all-americans-300289754.html
SOURCE The Aspen Institute