Speaking before the U.S. House Ways & Means Committee, Crandall supports bipartisan legislation to make retirement plans more widely available and increase retirement savings
WASHINGTON, Feb. 7, 2019 – Roger Crandall, Chairman, President and CEO of Massachusetts Mutual Life Insurance Co. (MassMutual), on Wednesday advocated for legislation before the U.S. House Ways & Means Committee that would make it easier and less expensive for employers to provide workplace retirement plans while encouraging workers to save more for their own retirements.
Crandall was invited to speak before the Committee by Chairman Richard Neal (D-MA), who represents the Western Massachusetts congressional district where MassMutual has been headquartered for nearly 168 years. The Committee hosted a hearing on retirement security during which legislation was discussed aimed at making it easier and less expensive for small businesses to offer workplace retirement plans such as 401(k)s. MassMutual is a leading provider of 401(k)s and other workplace retirement plans, serving approximately 30,000 employers and three million retirement savers nationwide.
“Workplace retirement plans, like 401(k) plans, are very effective in enabling American workers to save for retirement. But millions of Americans, especially those working for small employers, still do not have access to a workplace retirement plan,” Crandall said in his testimony. “There is extensive data that the costs and complexity associated with starting a retirement plan are the biggest obstacles preventing more employers from offering a retirement plan to their employees. With Congressional leadership and private sector innovations, we can address this problem together.”
In his testimony, Crandall said MassMutual supports the following key legislative initiatives:
Enacting the collection of legislative proposals known as the Retirement Enhancement and Savings Act (RESA). RESA would greatly decrease the cost of retirement plans for small employers, and would open up retirement plan coverage options for the growing gig economy. This is excellent bipartisan bicameral legislation and it is time to enact it. RESA would expand workplace retirement plan coverage by allowing so-called open multiple employer plans or “open MEPs,” expanding small-employer tax incentives designed to help offset the costs associated with establishing a new workplace retirement plan; and simplifying and streamlining plan administration. “Open MEPs” would permit unrelated employers to join together under a single retirement plan to harness economies of scale and reduce unnecessary administrative burdens.
Increasing retirement plan availability and savings by reducing the costs and administrative burdens typically associated with starting a retirement plan. Crandall endorsed legislative provisions to offer tax incentives for small businesses, like the small employer start-up credits improved by RESA. In addition, he proposed making it easier for employers to correct inadvertent plan administration errors; consolidate and simplify disclosures to retirement plan participants; and make it easier for employers to comply with complex rules that can be difficult and costly to administer under current law. Each of those changes would make it less costly for employers of all sizes, but especially small employers, to offer workplace retirement plans, according to Crandall.
Providing new incentives for workers to save more for retirement by enhancing retirement savings credits for those who contribute to retirement accounts and by promoting greater use of automatic savings features. Through automatic contribution features, employees automatically contribute a portion of their paycheck to their workplace retirement plan – and potentially increase savings rates over time – unless the employee expressly elects not to have contributions made on their behalf. Automatic enrollment and automatic escalation have been powerful tools in encouraging employees to save for retirement, Crandall pointed out.
Eliminating coverage barriers and increasing savings for populations that currently experience disproportionately lower retirement savings rates. RESA would make it easier for employers offering 401(k) plans to allow long-term, part-time workers to contribute to the plan, enabling them to close their retirement savings gap, Crandall noted.
“These retirement challenges impact everyone, but we also know that certain populations experience disproportionately lower retirement plan participation and savings rates – most notably, women, minorities, low-income employees, and small business employees,” he said. “Additional efforts should be made to increase retirement savings for these particular populations.”
Supporting proposals to facilitate and encourage lifetime income solutions. With ever-increasing life expectancies and the shift away from traditional defined benefit plans, it has become increasingly difficult to predict how much money any given employee will need in order to meet his or her financial needs throughout retirement, and to make those savings last a lifetime, according to MassMutual’s CEO.
“These problems, like others already discussed, can be particularly troubling for the retirement security of women, who tend to live longer than men,” Crandall said. “To combat these uncertainties, steps must be taken to promote lifetime income solutions.”
The proposals in RESA would do that by making lifetime income options more portable, according to Crandall. In addition, RESA would create protections for employers who make lifetime income options available under their plan but also by including other own innovative solutions, like making it easier for retirement savers to purchase longevity insurance and preventing retirement savers from having to unnecessarily withdraw their savings at age 70 ½, as required under current law, unless they are ready to do so.
Additionally, Crandall recognized Chairman Neal for introducing the Automatic Retirement Plan Act (ARPA) last Congress. Crandall called Neal’s bill “a bold and innovative solution – based entirely on a private sector solution – to reduce the coverage gap.” Crandall also added that “legislative action” is needed on ARPA and said it was his “hope that the private sector, including the small business community, can participate constructively with the Chairman (Neal) to identify ways to move this bill forward in a bipartisan manner that broadens retirement plans coverage.”
As part of its mission to promote financial well-being, MassMutual is introducing a new workplace financial and benefits planning tool – MapMyFinances -- to help workers assess their personal financial needs and make the best choices regarding short and long-term financial goals. MapMyFinances will be offered at no charge to the millions of Americans MassMutual serves, providing prescriptive guidance that prioritizes emergency funds, college funding, life and income protection, healthcare and retirement savings in accordance with each worker’s individual needs and budget. MassMutual is also working to expand retirement plan coverage among small employers by introducing a new 401(k) plan, Aviator Pro, which is simpler and less expensive for smaller employers.
“MassMutual strongly supports the Committee’s efforts to eliminate barriers to workplace retirement plan coverage and increase retirement savings,” Crandall highlighted in his testimony. “As the Committee continues to develop new ways to help more Americans adequately save for retirement, we look forward to working with Chairman Neal, Ranking Member (Kevin) Brady (R-TX), and other Committee members to help all Americans reach a financially secure retirement.”