Thomas Set to Include Auto Enrollment Measure in SS Reform Package

May 23, 2005 ( - An influential House Republican leader will reportedly include an automatic K plan enrollment feature in his proposed Social Security reform legislation, according to unnamed sources quoted by the Washington Post.

>The Post reported that House Ways and Means Chairman Bill Thomas (R-California) signaled the automatic enrollment move in talks with lobbyists.

>According to the Post sources, Thomas has also suggested to life insurance interests that he would back incentives for employers to convert K plan balances to private annuities. In exchange, the life insurance industry would not work against a dramatic expansion of Individual Retirement Accounts, 401(k)s and tax incentives designed to expand personal retirement savings, according to the deal.  Other measures designed to promote the option – and remove some of the current state law impediments to the feature have been introduced previously (see  Cardin’s Pension Legislation Would Repeal Roth 401(k) Option401(k) Automatic Enrollment Support Bill Introduced in CongressPSCA Throws Weight Behind Automatic Enrollment Bill ).

>The auto enrollment notion is likely to be popular since recent research has shown that participation rates soar among companies with automatic enrollment. Also employers like the idea because increasing K plan enrollment can cut their plan administration costs (See  Auto Enrollment Choices Impact Cost, Participation ).

>The annuity suggestion, however, could be more controversial, according to a GOP lobbyist quoted by the Post. Converting 401(k) balances to privately managed annuities (See  After Math ) could eat into workers’ savings balances, according to the report.