Not that a little inaction
from Congress would be a bad thing
However you feel about the results of last month's
elections, there's little disputing that things are going
to be different in Washington. Amazingly, though perhaps
not surprisingly, I'm already getting invitations to
presentations, or offers to send me assessments, on what
all this change will mean for benefit programs generally,
and retirement savings specifically.
My initial reaction was a bit like when I walked into
the mall the week after Halloween, and was confronted with
Christmas displays—it's too soon for this!
I doubt that many went to the polls with pensions on
their minds (even those of us who make our living
supporting them) and, with the ink on the Pension
Protection Act of 2006 still damp, one is tempted to think
that we have all the regulatory help we'll need until after
the next election—at least.
Personally, I'm not expecting much out of this Congress,
certainly not on pensions (does anyone really think that
the momentary comity displayed for the television cameras
will last?). We can probably "thank" the airline
industry's pension funding crisis for forcing the issue
this past term, but higher interest rates and new pension
accounting regulations from the Financial Accounting
Standards Board (FASB) will likely grease the skids with no
further legislative impetus.
For defined contribution plans, there's little question
that the PPA sets a lot of interesting trends in motion—and
much of that can proceed without the assistance of
Congress. Moreover, if the removal of EGTRRA's sunset dates
doesn't actually create true "permanence," it nonetheless,
for the time being, removes the ability of Congress to
simply allow distasteful (to some) tax breaks to expire.
Advice? Well, that was one of the more controversial
aspects of the PPA legislatively—and it's pretty clear that
that is one area in which controversy, and just a bit of
confusion, remains. I'm not at all sure that that will
be resolved in the near term, but one never knows.
Not that a little inaction from Congress would be a bad
thing. Most of us will have our hands full assimilating,
explaining, and implementing the new provisions of the PPA
until well past the 2008 elections. In addition to the
Department of Labor's newly minted proposals on Qualified
Default Investment Alternatives, we have yet to see some of
the details that will be required to fulfill some new
reporting obligations, including quarterly benefit
statements, and things like the Roth 401(k) may have a
broader appeal now that the EGTRRA sunset has been
removed.
However, as we lumber toward our next presidential
election, I wouldn't be surprised if some begin to wonder
aloud if automatic enrollment might not be better deployed
as a mandatory Âenrollment—after all, why leave "bad"
behaviors to chance? Nor would I be surprised to hear
Âlegislators beginning to talk not about the Âdisappointing
participation rates of the 44% of working Americans who
have the chance, but about why the other 56% don't have the
same opportunity. After all, all taxpayers are, in a sense,
subsidizing the programs of the 44% (similar arguments have
been made about employer-sponsored health-care programs
already, by the way).
Could you envision a sort of über-Social Security
program that mandated worker (and perhaps employer)
contributions that go into a private account? Maybe not in
that particular format today—but there are elements in that
design that could garner bipartisan support, IMHO. What
might that mean for retirement security? For your benefit
programs?
It's not too early to start wondering—after all, 2008 is
just around the corner.
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