House Ways and Means Committee Chairman Richard Neal, D-Massachusetts, has laid out his party’s vision for economic equity in health care and retirement.
In a letter included in his Policies and Priorities report, Neal says one of their priorities is increasing retirement security for U.S. workers, which would be achieved by policies strengthening Social Security benefits, growing multiple employer plan (MEP) participation and mandating automatic enrollment for 401(k) plans.
In recent years, Social Security forecasts have diverged greatly, with some expecting to depend on the benefit for future income and others believing it will be severely reduced or completely diminished by the time their retirement comes. The financial crisis caused by COVID-19, which fueled millions of layoffs and furloughs, might have driven an increase in Social Security claims that could lead to decreased benefits.
On this topic, Neal says two goals are improving Social Security benefits for low-wage workers and protecting disability benefits from regulations designed to reduce access.
The Democrats’ other goals include implementing automatic individual retirement accounts (IRAs) and 401(k)s in more workplaces and requiring auto-enrollment in 401(k)-type plans. There’s been a growing push to mandate auto-enrollment in 401(k) plans in recent years, and many have touted the benefits of automatic features in retirement savings plans. A 2017 report by the Defined Contribution Institutional Investment Association (DCIIA) found that among plans with automatic enrollment and escalation, 70% are saving 10% or more, and a 2018 survey by JPMorgan suggested that implementing automatic features can boost retirement confidence.
Neal also lists increasing participation in MEPs and improving education on the retirement vehicles as top priorities. He says the party wants to ensure that small business can take full advantage of the startup credit when participating in a MEP and receive education about the advantages and availability of these benefits and groups of plans.
He also hopes to address the inequity families of color face, especially regarding access to retirement savings and employer-based retirement plans. Neal notes that several of his party’s highlighted policies may help increase retirement savings for these families, including making the Retirement Savings Contribution Credit (the Saver’s Credit) refundable, and directing the U.S. Department of the Treasury to raise awareness of the credit in minority communities. He also says helping American families build emergency savings, while increasing targeted financial wellness advice and assistance with saving, debt and budgeting, is another key goal.
Creating children’s savings accounts, adjusting the new Setting Every Community Up for Retirement Enhancement (SECURE) Act provision for part-time worker eligibility in 401(k) plans to require only two years of service, and easing the path for military spouses to save within their employer-sponsored retirement plans are additional pieces of action Neal says the party will advocate for.
More information on the Democrats’ policy approaches can be found here.
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