Retirement and Pension
RSS Issue FeedRetirement Priorities
Retirement Security
As the baby boomers move into retirement, there is a greater emphasis on ensuring that people have sufficient assets. Conversations surrounding retirement security include increasing coverage and participation, clarifying and strengthening fiduciary responsibilities, and working to reduce the risk that individuals outlive their retirement assets.
We anticipate further conversation and legislation on these issues:
• Automatic IRAs/Universal IRAs—oppose proposals that require an employer mandate, create a TSP II system, or increase ERISA fiduciary liability for employers.
• Decumulation Strategies—work with Congress and our membership to reach consensus on legislation to promote useful decumulation strategies pertaining to annuities, long-term care insurance, and other products without overly burdening plan sponsors.
Notice and Disclosure Requirements
We are increasingly concerned about the volume of required notices and whether participants are becoming overwhelmed with the volume of information being provided. Consequently, we are urging the Department of Labor (DOL) to take a comprehensive look at the benefit notices that are required and will make this a priority in 2011.
State and Local Pension Underfunding
The unfunded liabilities of state and local government pension plans are of significant alarm to Chamber members. The Chamber is concerned about the increased burden on taxpayers —both individual and corporate. Moreover, we fear that this may give state and local governments an unfair advantage against private employers when competing for employees because the government provides greater benefits than employers can afford, and then employers pay for government-provided benefits through higher taxes. Therefore, we will continue to oppose proposals that would give state and local governments an unfair advantage against private employers when competing for employees.
Multiemployer Plan Funding
Certain multiemployer plans have been particularly hard hit as the current financial crisis exacerbates long-term funding problems resulting from shifting demographic trends and financial problems in certain industries. Because of the nature of multiemployer plans, when one employer goes bankrupt, the remaining employers in the plan become responsible for paying the accrued benefits of all the workers—this is often referred to as “the last man standing.” As the number of employer participants dwindles, employers remaining in the plan see their liabilities increase exponentially—forcing them to cover retirees that never worked for them. This system results in untenable contribution levels for the remaining employers, which can force them into insolvency as well. Without such reform, many employers—including a number of small, family-owned businesses—are in danger of bankruptcy.
The Financial Accounting Standards Board (FASB) issued two proposals that could substantially impact the business activity of employers that participate in multiemployer plans. The Chamber views the proposed disclosures as generally overly burdensome and potentially misleading. Therefore, we are concerned that they could have the unintended consequences of misleading investors and overly burdening employers and the plans. Therefore, the Chamber opposes both of these proposals and has urged FASB to reconsider these proposals as the negative impact on employers will substantially outweigh the minimal benefit gained from providing the additional information.
The Chamber will also do the following:
• Urge Congress to enact long-term funding reform for multiemployer plans.
• Monitor and engage with FASB as it evaluates and proposes changes to the accounting standards for measuring pension and other benefit costs, obligations, and assets.
Definition of a Fiduciary
On October 21, 2010, the Employee Benefits Security Administration (EBSA) issued a proposed regulation on the definition of a fiduciary under ERISA. We support the efforts of the DOL in updating the definition of a fiduciary. There have been significant changes in both the design of private retirement plans and the investment options and services provided for these plans. Although these changes have created increasingly complex investment schemes and financial arrangements, the determination of fiduciary status has not changed. Therefore, amending the definition at this time is appropriate. At the same time, we believe that the expansion of the fiduciary definition should not be freely interpreted to include every act related to a retirement plan. Rather, a balance needs to be struck that protects participants and allows for the free flow of information and services in the market.
Pension Funding
Since the financial crisis of 2008, businesses continue to face unexpectedly large pension contributions. The drop in the value of pension plan assets, coupled with the current credit crunch, has resulted in companies facing pension contributions that are double or triple the amount of the expected contribution. The Chamber successfully lobbied Congress to enact the Worker, Retiree, and Employer Recovery Act of 2008 and the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010. Additional measures are needed, however, and the Chamber will continue to work with Congress to ensure their passage.
Financial Services Reform
While the Chamber successfully lobbied for a number of exceptions for pension plans in the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are concerned that ensuing regulations could have a negative impact on employer-provided retirement plans. The Chamber has been working to make certain that this negative impact is minimized by ensuring that financial services reform regulations have a minimal impact on retirement plans.
Small Business Issues
Small business employers, like other types of employers, choose to offer benefits to their employees as a way to attract and retain talent. Many small business plan sponsors want to continue offering a variety of benefits but have their own unique issues when choosing to do so.
The Chamber is committed to decreasing the burdens on small business plan sponsors by supporting the following:
• Tax Penalties Under Code Section 6707—urge Congress to pass legislation allowing the Treasury secretary to not impose a penalty for failure to disclose reportable transactions when there is reasonable cause for such failure. More than a half dozen of the reportable transactions involve employee benefit plans used by small businesses.
• Interim Amendments—work with the IRS and Treasury to decrease the burden on small plan sponsors caused by the interim amendment requirements.
• Code Section 409A —urge Congress to amend Code Section 409A to limit the negative impact on small businesses.
Plan Fee Disclosure
Due to claims by plaintiffs and concern in Congress that fees in employer-provided plans are too high, there have been demands for greater disclosure of information on fees. The Chamber supports disclosure and transparency of information that allows participants to make informed decisions about their investments. In order to benefit participants, however, such information should be useful and easily understood. Moreover, it is equally important that disclosure requirements are not unduly burdensome to employers—particularly if the information is not meaningful to participants. The Chamber will work to ensure that overly complex requirements for plan fee disclosure, generated in response to attention garnered from lawsuits and the Hill, are not implemented by statute.
Phased Retirement
The Chamber is concerned about current retirement systems as well as ensuring that these systems continue to be valuable retirement tools. Encouraging the implementation of phased retirement programs is crititcal to this goal. The barriers to phased retirement are many and include legal, fiscal, policy, and practical issues. Phased retirement programs could be advantageous to employers, workers, and the overall economy. It would be injudicious for statutory and regulatory burdens to restrict what could otherwise be a beneficial situation for all parties. Rather, statutes and regulations should encourage employers to implement phased retirement programs that provide attractive benefits and incentives for workers to stay with their employers by continuing to address the legal, fiscal, policy, and practical barriers to phased retirement.
To view the Chamber's recent comment click here: http://www.uschamber.com/issues/comments
To View the Chamber's recent letters to Capitol Hill click here: http://www.uschamber.com/issues/letters
