Mandating retirement plans is a key part of addressing inequity in the retirement system, industry experts said at the Employee Benefit Research Institute's Retirement Summit.
"My concern and our concern should be that many Americans don't have any retirement savings at all," Secretary of Labor Martin J. Walsh said in his remarks Thursday morning.
Mr. Walsh noted that only 36% of Black households and 30% of Hispanic households ages 55-64 have retirement savings. "This is a crisis that we have to address in the United States of America," he added.
Edmund F. Murphy III, the president and CEO of Empower Retirement, said there is a clear solution to addressing disparities.
"The solution is we need to mandate plans," Mr. Murphy said in a morning panel on access to the retirement system. "And unfortunately, I don't think Congress will go that far."
While there is no national mandate for retirement plans in place, 12 states currently offer auto-IRA programs. These programs typically require certain employers not already offering retirement plans to automatically enroll their employees in the state-sponsored program.
Mr. Walsh pointed to the benefits of state auto-IRA programs, noting that employees have saved over $500 million through these programs so far.
One such program is CalSavers, which Executive Director Katie Selenski said has been a successful tool to help workers save for retirement.
"We are thrilled in California, and this is really similar across the live active state programs, (that) about 65% of the workers who are given the opportunity to participate through the automatic enrollment process stay in (and) don't opt out," Ms. Selenski said during the panel.
Ms. Selenski noted that employees are not receiving any financial incentives to participate in the program, as there is no state match or employer match. She also said that 98% of workers enrolled in CalSavers have accepted automatic escalation.
When asked what policies would be most impactful, Ms. Selenski said she was "thrilled to see the national-level mandate in the Build Back Better proposal," even though it likely has "a long way to go."
She also said she would like to see an increase in the saver's credit, which may be included in the final version of SECURE 2.0, a bipartisan package aimed at strengthening Americans' retirement security. The saver's credit is a tax credit for low- and middle-income workers that contribute to workplace retirement plans or individual retirement accounts.
Mr. Murphy also said he is supportive of SECURE 2.0 and "really (wants) to see that move through Congress."
In an afternoon fireside chat, Sen. Ben Cardin, D-Md., joining via Zoom, said he is "going to try to get (the bill) to the finish line before the end of this year." Mr. Cardin and Sen. Rob Portman, R-Ohio, reintroduced legislation in the Senate last year that has served as the basis for Congress' various SECURE 2.0 bills.
"The differences between the House and Senate have been negotiated, and we're very optimistic that a final bill is there," Mr. Cardin said. He added it's "issues of priority" that will determine whether the bill gets passed this year.
The two senators have worked together to promote retirement security legislation for many years, and both lawmakers received EBRI's Lillywhite Award. Mr. Portman is retiring at the end of his term.
