Santorum Releases Multi-Employer Pension, Auto Enrollment Proposals

Senator Rick Santorum (R-Pennsylvania) said in a Web statement that his Multi-Employer Plan Funding and Deduction Reform Act of 2005 (S 1825) was designed to give the same attention to multi-employer plans as many lawmakers are already giving to the nation’s much-troubled single employer pension system.

“As we consider ways to fortify the pension system for those in single-employer plans, we must not forget that our nation’s multi-employer plans are also struggling with billions of dollars in underfunding, putting the retirement security of nearly ten million workers and retirees at risk,” Santorum said in the announcement.

Calling the financial outlook of the multi-employer regulatory program “equally troubling” when compared to its deficit-ridden companion governing single-employer pensions, Santorum said the multi-employer insurance program run by the Pension Benefit Guaranty Corporation (PBGC) had a $236 million deficit as of 2004.

Santorum said he has been working with the Multi-Employer Pension Plan Coalition – a coalition of numerous employers, unions, and associations from a cross section of industries – to find a solution to ensure the long-term viability of multi-employer plans.

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Santorum’s bill is expected to impose funding discipline on multi-employer plans while giving them tools to reach targeted funding level goals under a reasonable timetable. Provisions in the amendment would increase the deductibility limit from 130% to 140% of plans’ unfunded current liability and would include additional withdrawal liability reform.

The second Santorum measure, 401(k) Enhancement Act: Encouraging Retirement Savings, deals with an increasingly briskly debated topic in the retirement plan services arena – using auto enrollment as a way to help plan sponsors beef up participation rates,

The measure provides incentives to employers to automatically enroll employees in their 401(k) programs and removes barriers that deter employers from offering automatic enrollment.

“Encouraging savings and ownership has been one of my top priorities as a US Senator,” Santorum said in a Web statement. “Unfortunately, statistics prove that Americans are not properly saving to live comfortably in retirement. Statistics indicated that less than 40% of  US workers have calculated how much they will need to retire, 30% have not saved anything for retirement, and only 20% feel very confident about their retirement savings.”