By Peter Schroeder - 01/26/16 12:02 AM EST
President Obama wants to make it easier for Americans to save for retirement, and plans to push a host of ideas on that front in his upcoming budget.
Citing rapid technological growth and fundamental changes in how the workforce operates, administration officials argued policymakers need to take steps to ensure as many Americans as possible are able to save for their retirement.
“We all know the economy has been changing in profound ways,” said Jeffrey Zients, director of Obama’s National Economic Council. “We need to find new ways to help families build up a nest egg.”
According to the White House, one-third of all working Americans do not have access to a retirement plan through their employer. That includes half the workers at small businesses, and 75 percent of people working part-time. And if Americans do not get a retirement plan through their job, they are highly unlikely to save on their own. Just 10 percent of working Americans without an employer plan set aside money in their own retirement accounts.
The biggest new idea among Obama’s proposals would make it easier for small companies to join forces and offer retirement savings plans to their employees. Currently, multiple employer plans can only be created by companies in similar fields, like auto dealers. Obama will propose to do away with that requirement, and allow more employers to share the costs of administering a retirement savings plans for their employees.
But the administration believes such a change would require an act of Congress, making it a tall order for GOP leaders to act in Obama’s final year in office.
All told, the White House believes its policy prescriptions could give 30 million more American access to retirement savings plans. The administration will also renew pushes for older ideas, like giving employers tax credits for providing or expanding retirement coverage, and making it easier for part-time employees to gain access to those plans. The administration also plans to repropose requiring employers that do not offer their own retirement plans to automatically enroll workers in individual retirement accounts, or IRAs.
Despite bipartisan buy-in to some of these ideas, many of these proposals to smooth the path to a well-funded retirement have not gained much traction with lawmakers. For example, Obama first proposed automatic IRA enrollment four years ago, in his fiscal 2013 budget.
The president also plans to write rules making it easier for states to come up with their own ideas to boost retirement saving.
Labor Secretary Tom Perez argued that employers should welcome these efforts.
“The most frequent thing we hear from employers is, ‘We’re losing people…I want to do it, but I’m a 50 person employer. I know how to make widgets, but I don’t know how to do retirement plans,’” he said. “What we’re trying to do is recognize those barriers and address them.”
The president’s budget will also include funds for nonprofits and states to explore ways to make retirement savings more portable, helping workers avoid accumulating a host of plans as they move from job to job.