A bold strategy to prevent a ‘Retirement Crisis’
Washington, D.C. (March 12, 2019) — The American Council of Life Insurers (ACLI) announced today that it will endorse a federal proposal requiring employers without retirement plans to provide workers with access to a payroll deduction for savings through an IRA, 401(k), or other qualified retirement savings plan.
The proposal, championed by House Ways and Means Committee Chairman Richard Neal (D-Mass.), could result in 30 million more Americans having access to retirement savings. This would lead to at least 22 million more Americans saving for retirement, according to ACLI estimates based on data from the Bureau of Labor Statistics. Chairman Neal introduced the Automatic Retirement Plan Act of 2017 in the 115th Congress and is expected to reintroduce it later this year.
“This bold approach is clearly needed to close the retirement savings gap and prevent a retirement crisis,” said ACLI President & CEO Susan Neely. “People are living longer without adequate retirement savings and increasing access to workplace plans can be a powerful solution. This proposal is designed to make it easier for employers to offer retirement plans. Workers would have the right to opt-out of participation but based on experience the majority will take advantage of the savings opportunity. When offered a retirement plan by their employer, four out of five full-time private-sector workers participate.”
Increase Incentives…Reduce Regulation
Neely said ACLI and its member companies have worked for years to increase incentives and reduce regulatory burdens for employers offering plans. “Endorsing an employer requirement is not a policy shift that ACLI makes lightly. We believe the scope of the looming crisis demands fresh thinking,” she said. “Automatically enrolling workers into a retirement savings plan is not a big new government program. It is a market-based solution that can help more people save more of their own money for the good of their families’ futures. Family financial security is the ultimate peace of mind.”
Congress is already focused this year on the need to act on retirement. The Retirement Enhancement and Savings Act (RESA), which has been introduced in the House, would make it easier and financially viable for small employers to join together to offer their workers 401(k)s or similar plans. RESA also would make it easier for employers to offer annuities, products that guarantee savings will last a lifetime, in their retirement plans. RESA gained tremendous bipartisan support and momentum during the last Congress. Neely said ACLI strongly supports passage again this year.
Americans are living longer than ever before, but many have not saved enough to sustain them in retirements that could last 30 years or longer. A recent study found that a third of Baby Boomers currently in, or approaching, retirement age have between nothing and $25,000 set aside. “Too many workers are ill-prepared to be financially secure in retirement,” said Neely.
“ACLI looks forward to working with Chairman Neal, other retirement security leaders in Congress, the business community, and other thought leaders to raise awareness of the retirement crisis and to seek additional solutions that ensure all Americans, regardless of where and how they work, their life stage, or the economic status of their households, have the tools they need reach their retirement security goals,” said Neely.
The American Council of Life Insurers (ACLI) advocates on behalf of 280 member companies dedicated to providing products and services that promote consumers’ financial and retirement security. 90 million American families depend on our members for life insurance, annuities, retirement plans, long-term care insurance, disability income insurance, reinsurance, dental and vision and other supplemental benefits. ACLI represents member companies in state, federal and international forums for public policy that supports the industry marketplace and the families that rely on life insurers’ products for peace of mind. ACLI members represent 95 percent of industry assets in the United States.
To learn more, visit acli.com and our blog, ACLI Perspectives, at acli.com/perspectives.