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 has submitted a research issue brief with policy ideas 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, details six options for Congress to consider to help expand pension coverage in a manner that is workable for both employers and employees. It 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.