Senators Todd Young (R-IN) and Cory Booker (D-NJ) have introduced the Commission on Retirement Security Act of 2018. The bill’s purpose is to create a commission that would study Americans’ retirement security, including private retirement programs, and make recommendations to Congress on how to improve it. The Commission would be expected to complete a review and report to Congress not later than two years after the Commission is established. Public input through hearings and testimony could be sought by the Commission during this period.
While many bills are never enacted and little legislation is expected to pass before November’s mid-term election, this bill may eventually have a greater chance of advancing because it has bipartisan support and comes on the heels of a 12-year period of increased legislative activity aimed at enhancing retirement security. Further, following a 40-year transition from traditional pensions (defined benefit plans) to defined contribution plans, U.S. citizens are expected to prudently plan for their own retirement security through personal savings, retirement savings programs like IRAs and 401(k) plans, and Social Security.
The bill would require a comprehensive review of private retirement plans and would not include Social Security. The Commission would be tasked with a comprehensive review of the following.
- Existing U.S. retirement savings vehicles
- Private retirement coverage, investment trends, retirement account balances, costs and net returns, retirement savings retention, and distribution activities
- Social trends, such as wage and economic growth, health care costs, and increasing life expectancy that could lead to less retirement security
- Retirement programs in other countries
If a three-quarter majority vote of the Commission is received, the Commission would be required to submit a report to the President and Congress of its findings along with its recommendations for legislative or administrative actions regarding how to improve or replace existing private retirement programs.
The bill, if enacted, would establish the Commission on Retirement Security, which would be made up of 15 members.
- The Secretaries of Labor, Treasury, and Commerce
- 12 appointed individuals who generally have expertise in such matters as retirement security, economics, aging, benefits, pension plan design, finance, the workforce, and labor unions.
Retirement Savings Challenges
As announced in a press release, Senators Young and Booker believe that America’s private retirement system faces major challenges and too many households are unprepared for retirement. A noted challenge is that the economy is undergoing a shift towards a “gig economy,” which may make it harder for individuals to save for retirement. In a gig economy, temporary and flexible jobs are more commonplace, and companies tend to hire more independent contractors and freelancers.
Senator Young states, “With many individuals reaching retirement with little to no savings of their own, we must take a serious look at our current retirement programs and make the changes necessary to help secure the futures of so many hardworking Americans. Our bill would enact a commission to better understand how we can strengthen private benefit programs and ensure our current and future generations have the tools necessary to plan for retirement.”
No schedule for committee consideration of the legislation has been announced. Visit www.ascensus.com and subscribe to the Industry and Regulatory news feed for the latest developments.
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