Empower Urges Retirement Industry to Collaborate on Policy Needs
One of nation’s leading retirement providers calls for stepped up leadership and aggressive engagement in advance of new president and congress taking office in 2017
Edmund F. Murphy III outlines long-held policy goals to capitalize on success of 2006 Pension Protection Act
Empower Retirement President Edmund F. Murphy III today called on retirement industry leaders to join forces to form a united coalition when engaging policy makers and regulators on issues of common concern.
“Now is the time for the leadership in the retirement industry to be proactive and suggest the policy measures we will want from the new presidential administration and the new Congress, which will take office in January 2017,” said Murphy, in an address to the Society of Professional Asset-Managers and Record Keepers (SPARK). “We cannot ask legislators and regulators to work with us if we’re not, as an industry, approaching them with a consensus and actionable set of goals to advance the retirement system for all working Americans.”
Murphy told the audience that Empower, the nation’s second largest retirement services provider, would work in conjunction with SPARK to help promote the development of a proactive policy agenda. The effort would include the development of an industry-wide forum in which members could build a set of agreed-upon priorities and use their collective expertise and experience to help legislators and regulators understand the value and benefits behind various proposals.
In addition, Murphy outlined a series of goals derived from many years of policy development work led by Great-West Financial President and CEO Robert L. Reynolds which in-part, resulted in the 2006 creation of the Pension Protection Act, landmark retirement security legislation that allowed for the creation of modernized defined contribution plans. These goals include:
- Correcting the tax window: Preserve and expand all existing savings incentives and correct the false “scoring” and 10-year “window” used today by the Treasury Dept. to account for the cost of savings deferrals.
- Fixing the access gap: Provide workplace savings to all working Americans— by supporting legislation to facilitate multiple employer plans, “starter” 401(K) plans and auto-IRAs at the federal level.
- Providing larger — and refundable — tax credits to small employers: Small companies that establish plans must have a greater incentive to do so. The incentive could be extended to part-time, freelance, and contract workers who establish IRAs. Expanded testing safe harbors should be developed for small employers.
- Requiring auto features: Require the adoption of “full-auto-suite” plan design (with participant opt-out) and establish an industry norm that will achieve deferral rates of 10 percent or more.
- Encouraging greater adoption of lifetime income options: Workers should have a tax incentive to choose guaranteed income options. In addition, plan sponsors should be encouraged to provide lifetime distributoion options.
- Alleviating health care expenses: Allow retirees to make tax-free withdrawals from qualified plans if they are used to cover supplemental health insurance or medical expenses.
Murphy noted that a key attribute of the 2006 Pension Protection Act Most was the “real sense of collaboration between policy makers and the industry to help the 401(k) in its continuing evolution to better meet the needs of the workforce,” said Murphy. “This is a model we should and must embrace once again.”
“By working together the impact of our collective engagement could be far more effective than what any one of us could accomplish alone. How we are engaging is just as important as what we are seeking to do,” said Murphy.
In his address Murphy urged retirement industry colleagues to leverage their established credentials as innovators and knowledgeable experts to drive enhancements to the retirement system. He noted that with 90 million Americans in defined contribution plans the retirement industry collectively holds an important position of trust.
“We know our business better than anybody. We hold the core competencies to drive innovative solutions and better outcomes,” said Murphy. “We will lead the needed improvements to America’s retirement system. It’s our job – and we need to make it our mission.”
Headquartered in metro Denver, Empower Retirement administers $435 billion in assets for more than 8 million participants as of 3/31/16. It is the nation’s second-largest retirement plan record keeper by total participants (Pensions & Investments, April 2016; data as of 9/30/15). Empower serves all segments of the employer-sponsored retirement plan market: government 457 plans, small, midsize, and large corporate 401(k) clients, non-profit 403(b) entities and private-label recordkeeping clients. For more information, please visit www.empower-retirement.com.
Stephen Gawlik – 303-737-0899 (office), 617-417-4408 (cell)
To learn more about how we’re empowering plan sponsors and their participants to be more engaged in their retirement plans than ever before, call us at 800-719-9914.