January 19, 2015
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President's retirement proposals send mixed message
WASHINGTON, DC "Retirement savings policy need not be a 'zero sum game.' Restricting savings for some workers does not help others achieve retirement security," said American Benefits Council President James A. Klein, commenting on some of the proposals unveiled by the White House in advance of the State of the Union address.
"Portraying the President's proposal as limiting retirement plan balances to 'about $3.4 million' is very misleading. In fact, the proposal limits annual benefits that can be paid at age 62. In today's extremely low interest rate environment, that equates to about $3.4 million. But given historical interest rates the government uses for pension calculations, the allowable account balance for a 35 year old worker would be about $300,000," Klein said.
"Politically, it is convenient to target people who have saved $3.4 million. But the devil is in the details when you look at the impact on younger workers and the inevitability that interest rates will rise over the coming decades. Savings today are needed to ensure retirement security for years into the future. We must not erode long-term economic security for short-term revenue gains," Klein added.
"Over the past few years I have addressed audiences of benefits professionals all over the country about both Democratic and Republicans proposals to restrict retirement savings to raise tax revenue. These benefits experts design and administer plans serving millions of Americans. Frankly, they are astounded that while they and many policymakers have warned about the need for more robust savings, lawmakers in Washington are putting forth proposals that will inhibit the savings needed for future retirement security," Klein noted.
"We commend President Obama for trying to help expand access to savings and make it easier for small businesses to support employee savings. The American Benefits Council's A 2020 Vision strategic plan also lays out proposals to achieve these goals. This is an effort on which Democrats, Republicans, businesses and participant groups ought to be united. We look forward to working with the Obama Administration and Congress to enact policies that will enhance retirement security," Klein concluded.
For more information on retirement policy matters, or to arrange an interview with Klein or Lynn Dudley, senior vice president, global retirement & compensation policy, please contact Jason Hammersla, Council director of communications, at firstname.lastname@example.org or by phone at 202-289-6700 (office) or (202) 422-4652 (mobile).
The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.