National Institute on Retirement Security Submits Research Issue Brief to U.S. Senate HELP Committee with Policy Options for Boosting Private-Sector Pension Coverage
Webinar Today at 2 PM ET to Review Research
WASHINGTON, D.C., May 8, 2024 – In response to a request for information issued by the U.S. Senate Health, Education, Labor, and Pensions (HELP) Committee, the National Institute on Retirement Security (NIRS) today submitted a research issue brief with six policy recommendations to help expand defined benefit (DB) pension coverage for private-sector employees.
The research brief, Policy Ideas for Boosting Defined Benefit Pensions In The Private Sector, indicates that expanding access to pensions should focus on plan design to meet the key goals of retirement plans: broad participation, shared financing, targeted income replacement, pooled investment and longevity risks, and lifetime benefits. Read the research.
Register for a webinar today, Wednesday, May 8, 2024, at 2:00 PM ET for a review of the research with the report authors.
The research indicates that future policy solutions must address two key issues. First, private-sector pension plans should provide an avenue for retirement adequacy for the large majority of Americans lacking pensions regardless of their demographic profile and income. Second, private-sector pension plans must be affordable and sustainable for employers. The research offers six recommendations for Congress to consider to help expand pension coverage in a manner that is workable for both employers and employees:
- Lower the per-person rate of Pension Benefit Guaranty Corporation (PBGC) premiums for single-employer pension plans.
- Reduce the variable rate PBGC premium.
- Formally acknowledge in statute risk-sharing plans.
- Permit greater flexibility in the use of funding surpluses in DB plans.
- Allow pre-tax employee contributions in private-sector pensions similar to state and local government pension plans.
- Formally acknowledge in statute that retirement benefits should be fungible for each individual and allow transfers from defined contribution plans to pension plans (and conversely) in the vein of Revenue Ruling 2012-4.
The report is authored by Tyler Bond, NIRS research director; Dan Doonan, NIRS executive director; Michael Kreps, Groom Law Group principal; John Lowell, October Three Consulting partner; Jonathan Price, Segal senior vice president and national retirement practice leader; and Zorast Wadia, Milliman principal and consulting actuary.
“We remain encouraged that the Senate HELP Committee is taking action to address the retirement savings crisis facing middle class Americans,” Dan Doonan said. “The recommendations set forth in this issue brief offer pragmatic ways to ensure more working Americans will have access to a pension that delivers adequate retirement income that won’t run out. As importantly, these policy solutions will help ensure pension costs are sustainable and predictable for employers. American workers and employers deserve a sustainable, win-win solution, and there indeed is a way to get there.”
Earlier this year, Doonan testified before the Senate HELP Committee about the scope of the retirement savings shortfall. He said the move away from pensions is a major culprit in the nation’s retirement crisis and serious policy discussions about rebuilding retirement security must include increasing pension coverage. Research finds that pensions provide reliable lifetime income for employees, are economically efficient, provide workforce benefits to employers, and deliver substantial economic impacts to communities across the nation, especially rural areas.
Read Doonan’s written testimony submitted to the HELP Committee.
The National Institute on Retirement Security is a non-profit, non-partisan organization established to contribute to informed policymaking by fostering a deep understanding of the value of retirement security to employees, employers, and the economy as a whole. Located in Washington, D.C., NIRS membership includes financial services firms, employee benefit plans, trade associations, and other retirement service providers. More information is available at www.nirsonline.org.
###
