ERIC Press Statement
For Immediate Release: April 10, 2013
Washington, D.C. -- Statement by ERIC President & CEO Scott Macey on President Obama’s fiscal year 2014 budget proposal to impose a $3 million cap on accumulated retirement savings and further increase PBGC premiums:
“The President’s FY 2014 budget proposal to limit the deduction or exclusion for contributions to defined contribution plans, defined benefit plans or IRAs for an individual with accumulated retirement savings of approximately $3 million appears to be short-sighted, confusing, and does not consider the unintended consequences of imposing such a cap.
“Individuals and families already are struggling to save enough for retirement, and they do not need another disincentive from saving. Moreover, the burden of calculating whether a participant exceeds the $3 million cap would only add an additional layer of complexity in retirement planning and would unfairly burden participants, as well as plan sponsors.
“Policymakers should keep in mind that most monies saved in retirement accounts are tax deferrals, and will eventually be subject to taxation. There are also complex rules which limit the amount that highly compensated workers can contribute to retirement plans, as well as detailed rules that assure comparable treatment of all participants in plans. This proposal appears to be a way to pay for other Administration spending priorities, with no real sound policy justification.
“ERIC urges the President to withdraw this ill-advised proposal and concentrate more on incentivizing individuals and families to save more for retirement, rather than penalizing those who have successfully planned for their retirement.
“The President also once again included a proposal to increase premiums paid to the Pension Benefit Guaranty Corporation based on a company’s credit worthiness. ERIC has repeatedly argued that the PBGC’s purported deficit is largely due to artificially low interest rates, and allowing the PBGC to set premiums based on a company’s so-called risk will only further push plan sponsors to exit the system. It should also be noted that granting the PBGC this new premium setting authority could be relatively unprecedented since insurers in the private sector normally must obtain regulatory approval for premium increases for risks they underwrite and face the responses of the competitive market. We urge the President to withdraw this misguided proposal.”
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The ERISA Industry Committee (ERIC) is a non-profit association committed to representing the advancement of the employee retirement, health, and compensation plans of America's largest employers. ERIC's members provide benchmark retirement, health care coverage, compensation, and other economic security benefits directly to tens of millions of active and retired workers and their families. ERIC has a strong interest in proposals affecting its members' ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.