Calling retirement a “pillar of the middle class,” Labor Secretary Tom Perez introduced a number of retirement proposals that are going to be included in President Obama’s 2017 budget.
One out of three workers does not have access to a retirement plan, which increases to half of workers at companies with fewer than 50 employees. To improve this access, Jeff Zients, director of the National Economic Council said the Obama administration is rolling out budget initiatives intended to give more than 30 million Americans access to a retirement savings opportunity at their workplace.
These budget proposals, Perez said during a White House press call, will help to ensure workers can carry their benefits with them across their career.
One of the primary initiatives is that the administration will be looking to work with Congress on broadening multiple employer plans (MEPs). Perez said that current law and guidance doesn’t allow current plans or employers to take full advantage of the benefits of open MEPs, which he calls an exciting and useful tool for employees. The administration’s initiative is to reduce some of the plans’ compliance burdens so employers face fewer obstacles in their adoption.
Perez said he hoped that this clarity and codification would allow for small businesses and independent contractors to take advantage of the plans. One of the unnecessary barriers he cited was that under current law, there has to be commonality between employers coming together to form a MEP. The administration would like to open up the program so that employers could more readily access an open MEP, such as those from different sectors but a similar location, for example, he said. The reason it is important to the administration that such opportunities get codified is that it wants to increase access and reduce burdens but make sure there are sufficient consumer protections for participants, he noted.NEXT: Auto IRAs and the fiduciary rule
The largest change being called for by the administration is that of the automatic IRA, in which employers without a retirement plan would offer automatic enrollment into IRAs. Zients noted that this proposal has bipartisan roots, being the brainchild of both The Heritage Foundation and the Brookings Institution and Perez said he is looking forward to working with lawmakers on these bipartisan issues.
In addition to promoting these ideas, the budget will include a $100 million grant proposal to encourage the development of portability ideas for benefits that will allow workers to take their retirement benefits and other employment-based benefits from job to job.
The budget initiatives continue the work of the administration’s initiatives that have already begun, such as the conflict of interest rulemaking, the myRA retirement savings vehicle, and the current state-sponsored retirement plan initiative.Despite reports that the DOL’s conflict of interest rule will be sent to the Office of Management and Budget (OMB) soon, Perez says the DOL is “neck deep” in the process of reviewing comments and hopes to reach a conclusion in the coming months.