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Leslie B. Kramerich, the Deputy Assistant
Secretary of Labor for the Pension and Welfare Benefits Administration, today
testified before the Senate Special Committee on Aging on the agency’s
efforts to expand retirement coverage and promote retirement savings for all
Americans.
Kramerich pointed out that “individuals face
a multitude of decisions about saving on their own for retirement. Therefore,
our challenge is to provide more information to help educate them on ways to
save and invest for retirement. As part of our Retirement Savings Education
Campaign, we are committed to assuring that all citizens — including
youth, minorities and women — have access to information with which to
make informed decisions.”
In her testimony, she focused on several
Administration initiatives to strengthen, simplify and expand pension coverage.
These included initiatives to create a simplified defined benefit pension plan
known as the Secure Money Annuity or Retirement Trust, to provide increased
portability of pension rights when employees change jobs, and to provide new
tax credits to employers, particularly small employers, as an incentive to
start retirement plans for their employees.
In addition, she announced the publication of an
interpretive bulletin clarifying how employers can make it easier for employees
to save for retirement on their own through payroll deduction contributions to
individual retirement savings accounts (IRAs).
The bulletin is intended to encourage employers
who are not ready to sponsor corporate pension plans to help their employees
save for retirement. The bulletin focuses on employers creating automatic
payroll deduction systems that employees can use to make their own
contributions to individual IRAs. The bulletin collects and restates existing
guidance the department has issued over the years on what employers can do
without actually creating a pension plan subject to the requirements of federal
pension law.
“Our new guidance provides additional
encouragement to employers, especially small employers, to offer their workers
an opportunity to put aside tax-deferred savings for their retirement,”
said Kramerich. “And, it furthers this Administration’s ongoing
commitment to broaden pension coverage by expanding opportunities for employers
to create retirement savings vehicles for their employees.”
In the past, the department has issued a number of
advisory opinions to address the treatment of IRAs under the Employee
Retirement Income Security Act. These advisory opinions have served as
individual guidance to members of the employer community. The interpretive
bulletin collects, codifies and summarizes that earlier guidance.
Under the proposed interpretive bulletin,
employers that offer payroll deduction for IRA contributions would not be
considered to have created or to maintain a pension plan subject to ERISA as
long as they limit their involvement with the IRA programs. For example,
employers may:
— display the corporate name or logo on material giving
information about the payroll deduction system;
— pay the administrative cost of operating the payroll
deduction system; or
— limit the number of investment vehicles to which employee
contributions will be forwarded through the payroll deduction system.
The interpretive bulletin is scheduled to be
published in the June 17 Federal Register and will be available through the
website of the department’s Pension and Welfare Benefits Administration at
www.dol.gov/dol/pwba. |
