April 15, 2013 (PLANSPONSOR.com) – The ERISA Industry Committee (ERIC) is urging lawmakers to proceed with caution when considering changes to the tax treatment of retirement savings.
In a letter submitted to the House Ways and Means Committee’s Tax Reform Working Group on Pensions and Retirement, Kathryn Ricard, ERIC’s Senior Vice President for Retirement Policy, wrote: “Changing the current tax treatment of employer-sponsored plans would jeopardize the retirement security of tens of millions of workers, impact the role of retirement assets in the capital markets, and create challenges for future generations of retirees in maintaining their quality of life.”
ERIC’s letter points out that the current tax treatment of retirement savings is one of the central foundations upon which the system has been successfully built, and the effects of such a change for individuals, employers and the system as a whole are simply too harmful and must be avoided.
Ricard explains that employers voluntarily establish retirement plans for a variety of reasons, such as competing for and keeping quality workers, and ensuring workers can retire from their workplace with adequate retirement savings. The letter notes that the voluntary nature of the private sector retirement system is critical to its success, and because employers come in all shapes and sizes, a “one-size-fits-all” approach to rules and regulations often will not address the challenges of companies who want to offer retirement benefits to their workers. To that end, ERIC urged Congress to continue to include reasonable flexibility for employers in any changes to the rules for retirement plans, arguing that flexibility allows companies to design plans that work effectively and efficiently based on the needs of their workforces and the industries in which they operate.